General Growth to get $3.9B in new funding
St. Louis General Growth Properties has received proposals to obtain an additional $3.9 billion from two separate investment firms, an infusion of capital the company hopes will help speed its reemergence from Chapter 11 bankruptcy protection.
Pershing Square Capital Management, one of General Growth’s largest equity holders, and FairholmeCapital Management LLC, one of its largest unsecured creditors, offered up the funds at a value of $15 per share.
General Growth filed for bankruptcy in April 2009.
Under the terms of the deal, $3.8 billion would be used to purchase shares of General Growth stock at $10 a share.
General Growth, the nation’s second-largest mall owner, said it believes it now has “substantially all of the cash required to fulfill the company’s capital needs in connection with its emergence from bankruptcy.”
The deal would be in addition to General Growth’s Feb. 24 announcement that Brookfield Asset Management has agreed to provide the company with $2.6 billion in equity. Both agreements need approval from General Growth’s board of directors and U.S. Bankruptcy Court.
“The proposal from Fairholme and Pershing Square builds on the significant momentum we have created to return GGP to a strong financial foundation for the future,” General Growth CEO Adam Metz said in a statement.
In connection with the deal, Pershing Square founder and trustee Bill Ackman has resigned from General Growth’s board of directors, according to the St. Louis Business Journal.
A perfect storm for shoplifters
Retailers are fortunate the majority of customers are honest and choose to pay for the items they need and want. However, even the most well intentioned shoppers can succumb to the allure of theft when their moral compass is exposed to the polarizing forces of a recessionary economy and a retail environment where the perceived risk of apprehension is low due to thinly staffed stores. As a result, retail theft characterized as amateur or opportunistic is on the rise, according to 78% of retailers responding to a survey conducted by the Retail Industry Leaders Association (RILA). While amateur and opportunistic thieves are more active, all types of theft have increased, with 74% of retailers reporting seeing an increase of stolen items found in online marketplaces, and 65% reporting increased theft by organized groups.
A rebound awaits in key categories
Target is the beneficiary of a perceived quality gap relative to Walmart, and that typically helps it in head-to-head comparisons where such categories as apparel and home are concerned. Unfortunately, consumer decision-making is seldom so linear, and Target has a slew of other retailers against whom it must compete, and recent sales results suggest it has work to do. Target has reported weak (flat or declining) results for its apparel and home categories and did so again in February. However, such companies as TJX, Ross and Kohl’s, which appeal to the same value-oriented shoppers as Target, produced solid gains. TJX said its February same-store sales increased 10%, Ross produced an 11% increase and Kohl’s was up 3.7%. Also producing gains were such competitors as Nordstrom, Macy’s and JCPenney, which serve customers squarely in the crosshairs of Target’s “expect more, pay less” value proposition. Macy’s reported a better-than-expected increase of 3.7%, and Nordstrom topped analysts’ views with a 10.3% increase. JCPenney’s same-store sales rose 1.2%, which was also better than expected.