General Growth hires bankruptcy counsel

SAN DIEGO (Reuters) - General Growth Properties Inc GGP.N, the No. 2 U.S. mall owner, said on Thursday it hired law firm Sidley Austin as bankruptcy counsel as it negotiates with lenders for more time to restructure its $27 billion debt and obligations.

General Growth has $1.13 billion in debt coming due, including $900 million in secured mortgage debt due November 28 on two Las Vegas shopping centers -- Fashion Show mall and Shoppes at the Palazzo -- and $58 million of corporate debt on December 1, it said in a U.S. Securities and Exchange Commission filing.

It also faces another $3.07 billion due next year.

"We are looking at multiple options to address our current financial situation, among them continuing to work with our syndicate of lenders on loan extensions," General Growth said.

But RBC Capital Markets analyst Rich Moore said bankruptcy seemed unlikely in the near term.

"Management indicated that the hiring of bankruptcy council happened weeks ago and that it did not indicate a bankruptcy was imminent," Moore wrote after meeting General Growth senior management at the National Association of Real Estate Investment Trusts conclave in San Diego.

"Instead, management suggested that it was working to avoid a bankruptcy, if possible."

Moore believed the two major loans on the $900 million would be extended before their November 28 maturity date.

The lender groups include between five and seven banks and negotiations regarding an extension are under way.

"Management indicated that it would make a public announcement regarding the November 28 maturities no later than Nov 28," he said.

To raise cash, Chicago-based General Growth has put Fashion Show Mall and Shoppes at the Palazzo casino and another Las Vegas mall, Grand Canal Shoppes, up for sale. The company would have to raise about $1.6 billion to pay off the upcoming maturities through April.

It has also put other properties on the market, including two office assets in Portland and Seattle, as well as Victoria Ward in Honolulu, Moore said.

General Growth shares, which have dropped 99 percent so far this year, hit a new low of 31 cents during midday trading on Thursday. The stock closed at 40 cents, unchanged, on the New York Stock Exchange.

(Reporting by Ilaina Jonas and Jessica Hall in Philadelphia); Editing by Clarence Fernandez and Andre Grenon)