NEW YORK Dec 8 Hedge fund Pershing Square Capital Management has exposure to 25.6 percent of U.S. mall owner General Growth through stock purchases and a series of swaps with several investment banks, the hedge fund said in a regulatory filing on Monday.
As of Dec. 8, the hedge fund founded by William Ackman, beneficially owns 7.5 percent of General Growth's common stock, or 20,080,690 common shares, Pershing Square said in a filing with the Securities and Exchange Commission.
It also has additional economic exposure to about 48.5 million common shares under certain total return swaps with entities related to BNP Paribas SA (BNPP.PA), Citigroup Inc's (C.N) Citibank, Morgan Stanley (MS.N) and UBS AG UBSN.VX, the firm said.
General Growth, which owns more than 200 shopping malls in 44 states, has $1.13 billion in loans due by the end of December and $21.9 billion in debt maturing by the end of 2012.
Last month, General Growth confirmed it hired law firm Sidley Austin as bankruptcy counsel and said it may need bankruptcy protection if it cannot meet debt maturities this year and next.
General Growth Properties Inc (GGP.N) shares closed down 6 percent, or 10 cents, at $1.55 on the New York Stock Exchange on Monday. Since the beginning of the year, its stock have fallen 96 percent.
The swaps and Pershing's stock bring the fund's total economic exposure to 68,580,690 shares, or 25.6 percent.
In the total return swap, Pershing Square pays financing fees to the banks. If the shares go up, the fund receives the gains, but if shares go down, it assumes the loss.
The derivatives trades gave Pershing Square exposure to shares without owning them outright, so the banks essentially bought the stock on behalf of Pershing Square.
Pershing Square could not buy more than 9.9 percent of General Growth's shares outright without falling afoul of special share ownership rules that REITS typically follow to maintain their special tax-advantaged status. (Editing by Andre Grenon)