I've read that currently held shares will be worth $15.50 divided between a new GGP stock ($10.50/share) and a new Howard Hughes stock ($5.00/share, though each new share supposedly will be valued around $50/share). Not bad for those who took a flyer on GGP at < $1.00/share. My questions are: 1) how many shares of each will we have when the dust settles? 2) is the $15.50 value per share a floor to its share price on the day of exiting bankruptcy? 3) What if, like today, the share price exceeds the $15.50 share price? Do we lose the additional value of each share? Thanks for your responses .....
http://www.reuters.com/article/idCAN1915056320101020?pageNum...by way of example, lets assume you currently hold 10,000 shares of ggp. once the por is approved (assumed to be tomorrow at the scheduled hearing) and ggp emerges from bk (assumed to be monday, nov. 8) your old ggp shares will be composed of the following:1 share of new ggp for each share of old ggp that you owned. i.e. you would receive 10,000 shares in the newly emerged general growth properties..09873 shares of hhc (howard hughes corporation) for each share of old ggp that you owned. i.e. you would receive 983 shares of hhc stock.the 10,000 shares of old ggp which you owned would be cancelled in exchange for the above.it is my belief that the $10.50 value on the new ggp and the $5.00 value on the hhc stock was a floor value placed on each of these stocks when brookfield, fairholme, and pershing agreed to provide their multi-billion dollar funding package in exchange for stock in the new companies. that does not necessarily mean that the new stock will be issued at those prices.general growth negotiated with these entities (and texas teachers retirement fund) that IF the post emergence stock offering was placed at values greater than the $10.50 and $5.00 amounts that general growth could claw back up to about $2.5 billion in stock that pershing, fairholme, brookfield and texas teachers had received, thereby reducing the percentage ownership these entities would have in the new ggp and hhc companies.now to your question about value. it is again my belief that when the underwriters do the ipo of the new ggp and hhc stock (which i would assume would be on monday the 8th) that those shares could be offered at an amount greater than the floor price. if that is the case there will be upside beyond the presumed $15.50 floor. if the stock is offered at the floor price and there is no upward movement upon issuance, then today's price of around $17/share would "lose" about $1.50/share.i've thought all along that the stock would issue above the floor price and that might be why you are seeing the stock trading above that level. this has been one of the tightest lipped bankruptcy processes i have seen. there has been little to no leakage of inside information regarding the process ahead of formal announcements. therefore i believe that any trade above the floor is being done on the speculation that the offering will be done at a price greater than the floor value.one other point regarding the hhc stock. it will be priced to reflect an approximately 10 for 1 reverse split (the .0983 per share calculation). therefore, the $5.00 floor needs to be re-priced to $50.86 share but remember you are getting less shares.the time to play this stock in the last few months was during the runup over the simon takeout offers. the price climbed above $18/share. after the simon bid was rejected, the stock fell into the $12's. some good money was made by those who felt (correctly) that ggp's management would reject simon's bid as a low-ball offer for the quality of assets held by ggp. if you had sold your 10k shares in the $17.50 to $18.00 range anticipating the rejection of simon's bid and bought back in someplace in the high $12's there was a good $50k to be had.i don't think the speculation now is worth the bet. if you were to have sold today expecting to get back in at $15 for a quick $2/share uptick and the new stock ends up being offered above the floor price you would find yourself chasing it.i've been in since march '09 and got my shares at an average of $.039/share. am currently sitting on about a 4400% gain and am just happy to let this emerge and see how it plays out.40% of my holdings are in ira's and the remaining 60% is in a taxable account. if the stocks spike on emergence i might trade my ira shares so as not to incur capital gains. even though there is uncertainity about who the new ceo will be and what management team will be put into place upon the selection of the new ceo i believe there will be a lot of interest in this stock (mainly the new ggp as opposed to the hhc stock). the new ggp will be a reit and any reit indexes will be obligated to pick up shares of ggp to properly reflect ggp's inclusion in the reit universe of stocks. hhc will not be a reit and will probably be 3-5 years from reaching its stride so the interest might be limited to those who truly are looking for a long-term play with a lot of potential upside.if ggp is not a $30 stock by sometime during 2013 i will be very surprised but then again, the last 2 years have provided more than enough surprises to last most people a lifefime.
judge approves exit from bk:On Thursday October 21, 2010, 1:14 pm NEW YORK (Reuters) - A judge on Thursday approved a reorganization plan for General Growth Properties Inc (NYSE:GGP - News), paving the way for the No. 2 U.S. mall operator to exit Chapter 11 bankruptcy next month."This is an extraordinary case," General Growth Chief Executive Adam Metz said.Under the plan confirmed by the court, all bond holders will be repaid and shareholders, who often lose everything in a bankruptcy, will walk away with more than $5.2 billion of equity.The reorganization plan was approved by U.S. Bankruptcy Judge Allan Gropper of U.S. Bankruptcy Court in Manhattan. General Growth said it expects to emerge from bankruptcy around November 8.(Reporting Ilaina Jonas; Editing by Steve Orlofsky)
Thanks for the explanation and update. It sounds like you've been following this quite closely. While not realizing the +4000% gains you've experienced, done quite nicely buying in at $0.74 and hanging on tightly. Seems like patience and the belief that GGP still had quality assets despite their financing problems is about to pay off. Soon need to decide what the next moves will be ...
i initially bought 30k shares and over time sold off 25% of that holding. still holding 22,500 shares and like you i need to decide what to do. 40% of my stock is in ira's and the remaining 60% is in a taxable account. needless to say, i am extremely overweight this stock. most likely before the year end i will sell 2,500 shares of new ggp from my taxable account just to replenish my cash cushion. i should receive 1,228 shares of hhc in my taxable account and plan to sell the 228 shares getting me down to an even 1,000 shares in the taxable account. timing may depend on when/if a dividend is declared for the new ggp and what the date of record will be.i will probably let my ira position ride for quite some time for both the new ggp and the hhc stock. any dividends collected will be divested into other positions (will sell any stock dividend and redeploy the cash elsewhere).in the taxable account on a go forward basis, my plan is to collect the annual dividend and after the date of record sell off between 500 and 1,000 shares per year. i'm pretty well retired now so i will use distributions from this taxable account to supplement my retirement income with intent of letting my ira's ride until i'm 70 1/2 years of age and the required minimum distribution kicks in.of course, this plan could go south depending on how the economy behaves but setting aside some more cash now should give me the ability to not have to react to market fluctuations.if anyone were to ask me what i thought was the best opportunity for a double in the next 18-24 months, stock in the new ggp would be it.since you also have a very low basis, the annual dividends in ggp will represent over a 100% return on investment each and every year. that's sweet!whatever your plan, good luck with it. this has truly been a wonderful investment and while i would hope to live long enough to find another one of these, this was surely a once in a lifetime stock pick.
Press Release Source: General Growth Properties, Inc. On Thursday October 21, 2010, 7:29 pmCHICAGO--(BUSINESS WIRE)-- General Growth Properties, Inc. (“GGP”) today announced November 1, 2010, is the record date for the distribution of shares of the two separate publicly traded corporations that will exist following GGP’s emergence from bankruptcy. Pursuant to GGP’s plan of reorganization, each holder of a share of “old” GGP common stock as of the record date will receive 0.0983 of a share of common stock of the spin-off company, The Howard Hughes Corporation. Following the distribution of the shares of The Howard Hughes Corporation, existing shares of “old” GGP will be converted into and represent the right to receive one “new” GGP share. No fractional shares of new GGP or The Howard Hughes Corporation will be issued. The record date was determined in accordance with the confirmation order entered today by the bankruptcy court. The distribution date will be the day GGP emerges from bankruptcy, which is expected to be on or around November 8, 2010.New GGP’s common stock has been approved for listing under the symbol GGP, subject to official notice of issuance, on the New York Stock Exchange (“NYSE”). The Howard Hughes Corporation has filed an application to list its common stock on the NYSE under the symbol HHC. GGP anticipates that NYSE “when issued” trading in the common stock of both companies will commence prior to the distribution date. An update on commencement of “when issued” trading will be provided when available.Given the nature of this transaction, holders of “old” GGP shares who sell their shares leading up to and including on the emergence/distribution date will be giving up their entitlement to both new GGP and The Howard Hughes Corporation shares. Holders are therefore encouraged to consult their financial advisors before trading their existing shares of GGP.
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