General Growth fails to win bondholder support

NEW YORK (Reuters) - U.S. mall owner General Growth Properties Inc GGP.N, which is struggling to avoid filing for bankruptcy protection, on Monday said a plan to defray payment on five series of bonds failed to secure sufficient bondholder support, sending its stock down as much as 10 percent.

The second largest U.S. mall owner said that after two extensions it still had not garnered enough support from holders of $2.25 billion of bonds of Rouse Cos, the developer General Growth bought in 2004.

The company is already in default of several mortgage loans and has failed to pay 3.625 percent Rouse notes at maturity on March 15. The default triggered cross-defaults on other General Growth debt.

“If it walks like a duck and quacks like a duck, I guess that still doesn’t mean it’s a duck -- i.e., bankrupt,” Kevin Starke, senior analyst at CRT Capital Group, wrote in a research note.

Shares of General Growth, which have lost more than 98 percent of their value since the start of 2008, were down 7.6 percent at 61 cents per share, after having fallen as low as 57 cents a share in earlier trading on Monday on the New York Stock Exchange.

General Growth said it continues to negotiate with an ad-hoc committee that represents 41 percent of the bonds and has already had approved the plan. It also continues discussions with the lenders of its $2.58 billion 2006 senior credit agreement, which also had granted an extension of a forbearance agreement until the end of 2009.

The solicitation for consent for a plan for bondholder to refrain from exercising remedies with respect to payments throughout 2009, expired March 27.

“Although we did not achieve the minimum acceptance levels for each series of notes, we did receive a significant number of consents from the holders of all five series,” said Adam Metz, chief executive, in a statement.

Reporting by Ilaina Jonas, editing by Gerald E. McCormick