UPDATE 3-General Growth reaches pacts with more lenders
* Judge OKs step toward General Growth reorganization
* General Growth increases debt agreements to $9.7 bln
* Confirmation hearing scheduled for Dec. 15
* Shares close up 0.7 pct (Adds deal specifics, executive quote on Simon Property, background, Fitch comment; updates share price)
By Ilaina Jonas
NEW YORK, Dec 2 (Reuters) - Mall operator General Growth Properties GGWPQ.PK reached additional agreements with creditors to extend loans as part of a plan now covering $9.7 billion of secured debt and due to be considered by a bankruptcy judge later this month.
The company late Tuesday filed a plan of reorganization to repay loans on 92 properties, including 77 shopping centers, three office buildings, 10 smaller shopping developments and two industrial properties.
Each of the entities involved in the loans will have to approve the agreements, and U.S. bankruptcy Court Judge Allan Gropper approved sending the documents to those creditors, court papers showed. A confirmation hearing for the plan is scheduled for Dec. 15.
General Growth said on Nov. 19 it had agreement with holders of $8.9 billion of secured debt.
The Chicago-based company continues to negotiate with holders of the remaining $5.2 billion of its $14.9 billion in property-backed debt included its bankruptcy filing. The company has about $7 billion more in unsecured debt.
Under the plan filed with the court, lenders agreed to hold the current interest rate on the loans and extend the date at which they mature. The weighted-average maturity date under the deal is extended by 5.2 years.
In exchange, General Growth agreed to repay the loans in full. It also agreed to pay, among other things, any unpaid amortization of principle, restructuring fees, special servicing fees, all uncontested pre-bankruptcy claims as well as some of the creditor's legal fees.
The deal also calls for General Growth to increase reserves and impose tighter restrictions on possible future bankruptcy.
The plan will cost General Growth $367 million, a source familiar with the deal said.
The lenders who have tentatively approved the deal include eight special servicers -- CWCapital Asset Management, LNR Partners, Capmark Finance, J.E. Robert Cos., Midland Loan Services, Centerline Capital Group, Pacific Life and ORIX -- who oversee troubled loans underlying commercial mortgage-backed securities (CMBS), and insurance company Prudential.
FEWER PROBLEMS SEEN
"There are a lot fewer problems for General Growth to worry about," said Derek Smith, attorney with Paul, Hastings, Janofsky & Walker, which is not directly involved in the bankruptcy.
General Growth owns or has an interest in more than 200 malls, including Fashion Show in Las Vegas, Ala Moana Center in Hawaii, and Faneuil Hall Marketplace in Boston.
The second largest U.S. mall owner became the biggest real estate failure in U.S. history when it filed for bankruptcy in April after the credit crisis dried up mortgage sources.
General Growth filed for protection from creditors when it was unable to refinance maturing debt, even though it had $29.56 billion in assets. Some of its other entities, including properties it owns with other investors in joint ventures, were not included in the bankruptcy.
General Growth has the exclusive right to come up with its own reorganization plan through late February.
"When we filed for bankruptcy we said we had a number of conditions," Thomas Nolan Jr., General Growth president and chief operating officer, told Reuters. "The first was to deleverage the company. The second was to put a more coherent maturity schedule in for our debt. This step goes ... a long, long way to accomplishing that objective."
If the plan is approved and confirmed by the court, the entities that own the malls would emerge from bankruptcy within 60 days. The loans would return to performing status 60 to 90 days after, Fitch Ratings said. The rating agency said it did not expect the loan modifications to effect the ratings on the associated CMBS bonds.
The properties still would be controlled by General Growth. The company would be able to sell the properties, but the loan agreements would not be transferable to a new owner, unless the lender agreed, the source said. They would be transferable if another company bought all of General Growth.
Last month, Simon Property Group (SPG.N), the No. 1 U.S. mall owner, said it hired investment adviser Lazard Ltd and law firm Wachtell Lipton Rosen & Krantz to help explore a possible bid for all or part of General Growth.
"We're flattered by potential investors and others including Simon, but we're very focused on the work we have to do," said General Growth's Nolan.
Shares of General Growth on Wednesday closed up 5 cents, or 0.7 percent, at $6.95.
The case is In re: General Growth Properties Inc, U.S. Bankruptcy Court, Southern District of New York, No. 09-11977. (Reporting by Ilaina Jonas, Caroline Humer and Chelsea Emery in New York and Santosh Nadgir in Bangalore; editing by John Wallace and Tim Dobbyn) ((email@example.com; within U.S +1 646 223 8780; Outside U.S +91 80 4135 5800; Reuters messaging: firstname.lastname@example.org))