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General Growth Wins Approval on Last of Secured Debt

General Growth Properties Inc., the second-biggest U.S. mall operator, finished restructuring its $15 billion secured-debt load, clearing an obstacle from its path out of bankruptcy.

Bankruptcy Judge Allan Gropper in Manhattan today approved a restructuring agreement on a $95 million loan tied to a Louisiana mall. It’s the last of the Chicago company’s secured debt that needed to be restructured in bankruptcy, Anup Sathy, a lawyer for General Growth, said in court.

“I’m pleased to report, your honor, that our last loan is done,” Sathy, an attorney with law firm Kirkland & Ellis, told the judge.

Today’s ruling by Gropper marks a milestone in General Growth’s bankruptcy case. The mall operator has spent months obtaining court approvals for restructuring deals on its secured debt.

Gropper said he was “delighted” that General Growth and creditors reached a deal. A unit of Citigroup Inc. represents holders of the loan, according to court documents.

“I think everyone has benefited from the restructurings of all the loans,” the judge said. “The company is now on an entirely different economic footing than when the case started.”

Extended Maturity

General Growth reached agreements with lenders on a total of 108 loans worth $15 billion, Sathy said. The debt is tied to 144 properties. The deal approved today, on the Oakwood Center mall in Gretna, Louisiana, extends the maturity of the loan to June 1, 2014, according to court papers.

General Growth filed the largest real estate bankruptcy in U.S. history in April 2009 after amassing $27 billion in debt making acquisitions. Its properties include New York’s South Street Seaport, Boston’s Faneuil Hall and the Grand Canal Shoppes and Fashion Show in Las Vegas.

With agreements on its secured debt in place, General Growth can now turn its attention to the final phase of its reorganization: cementing an agreement for new financing commitments that will fund the company’s exit from bankruptcy protection.

Earlier this month, the company won court approval to move forward with an investment proposal from Brookfield Asset Management Inc., Fairholme Capital Management LLC, and Pershing Square Capital Management LP. They have agreed to invest $6.5 billion into the company, subject to higher bids from other investors. The company plans to seek court approval of the financing commitments in September, according to court documents.

The case is In re General Growth Properties Inc., 09-11977, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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