| NEW YORK
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
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
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)