UPDATE 3-General Growth to sell assets, changes management

Mon Oct 27, 2008 10:35am EDT

Related Topics

* Seeks to sell Las Vegas retail assets

* Independent directors named interim CEO and President

* Says fired former CFO received $90 mln loan

* Stock up 2.3 pct in early trading (Adds analyst comment, share move)

NEW YORK, Oct 27 (Reuters) - Mall and land owner General Growth Properties Inc (GGP.N), whose stock has dropped more than 90 percent in the past year, said on Monday it had replaced its CEO and planned to sell properties in Las Vegas.

The company also said it had discovered that its former chief financial officer had received a $90 million unsecured loan, breaching company disclosure policy.

Independent director Adam Metz was named interim chief executive, replacing John Bucksbaum, who will remain chairman.

Independent director Thomas Nolan Jr. will become interim president while former president Robert Michaels will give up his seat on the board but continue as chief operating officer.

"We believe investors may be encouraged to see two outsiders (people without an emotional attachment) running the process and willing to liquidate trophy assets," Wachovia Capital Markets analyst Jeffrey Donnelly said in a client note. "We expect shares will outperform today on this news."

The company's stock was up 2.3 percent at $2.22 in early trading. Last Wednesday, the shares lost a third of their value in a broad sell-off of debt-heavy real estate companies that have high leverage and large near-term debt maturities.

The company has about $1.2 billion in debt coming due next month and another $3 billion in 2009.

It has been trying to raise money through preferred share issues and by selling assets, but the current tough business environment is making it difficult for potential buyers to raise money to buy a shopping mall or office building.

The company said it had discovered that an affiliate of a Bucksbaum family trust had extended loans to Michaels and to former Chief Financial Officer Bernard Freibaum.

The Michaels loan has been repaid, while $80 million remains outstanding on a loan to Freibaum, who was fired earlier this month.

Failure to disclose the loans violated internal company policy, but no company assets were involved and no regulatory rules were violated, General Growth said.

Freibaum could not immediately be reached for comment.

The Chicago-based company, which earlier this month suspended its dividend, also said that its board was evaluating all financial and strategic alternatives amid "unprecedented challenges in this economic environment."

It plans to sell its portfolio of Las Vegas retail properties that include the Fashion Show Mall and The Palazzo, as is working with lenders to extend a Nov. 28 maturity date on debt tied to those properties. The company said it remained current on its debt obligations.

The real estate investment trust is set to release quarterly results on Friday before the market opens.

(Reporting by Ilaina Jonas and Nick Zieminski; Editing by Ted Kerr)

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