Chicago-based General Growth Properties Inc. is warning that it must refinance a large chunk of its short-term debt, or face the possibly of filing for protection from creditors in U.S. Bankruptcy Court.
General Growth owns Manchester’s Shoppes at Buckland Hills mall.
General Growth also is cautioning that its stock could be delisted by the New York Stock Exchange if it falls below $1 per share for 30 consecutive days.
So far, the company’s stock has been hovering not far above the $1 per share mark.
Over the past 52 weeks, the stock has ranged between a low of $1.30 per share and a high of $51.24 per share.
In its Nov. 10 filing with the Securities and Exchange Commission, the company painted a bleak picture of its prospects.
Refinancing Needed
“We may not be able to refinance or repay our substantial indebtedness, which could have a materially adverse affect on our business, financial condition, results of operations, and common stock price,” General Growth stated in its filing.
Also in the filing, General Growth stated that it has a “substantial” amount of debt it may not be able to refinance or repay.
As of Sept. 30, it has approximately $1.13 billion and $3.07 billion in debt maturing in 2008 and 2009, respectively.
“Due to the continued weakness in the credit markets, there can be no assurance that we will be able to refinance this debt on acceptable terms or otherwise,” it said.
“Failure to refinance or repay our debt as it comes due, or a failure to satisfy the conditions and requirements of such debt as outlined above, will likely result in an event of default under such debt and would allow the lender to accelerate such debt. If our debt is accelerated, our assets may not be sufficient to repay such debt in full, and our available cash flow may not be adequate to maintain our current operations.”
The company added, “Under such circumstances, or if we believe such circumstances are likely to occur, we may consider or pursue various forms of negotiated restructurings of our debt and equity obligations and/or asset sales, which may be required to occur under court supervision. Deteriorating economic conditions will have an adverse effect on our revenues and available cash, and may also impair our ability to sell our properties.”
Delisting Possible
General Grown said if the price per share of its common stock trades below $1 for an extended period of time or shares are delisted from the NYSE, there could be “a negative effect on our business that could significantly impact our financial condition, our results of operation, and our ability to service our debt obligations.”
On Nov. 5, the company posted a third-quarter loss of $15.4 million, far worse than the same quarter in 2007 when the company posted a loss of $9.35 million.
The quarterly decline dragged down the company’s year-to-date net earnings to only $27.22 million, 88 percent lower than at the same point in 2007 when General Growth had net profits of $229.22 million.
Overall revenue in the third quarter slid 5.7 percent to $814.7 million, down from $864.2 million in the comparable period a year ago.
But for the first nine months of the year, the company saw a 5.6 percent increase in total revenue to $2.46 billion, up from $2.33 billion at the same point in 2007.
