General Growth Replaces CEO and President, Will Sell Las Vegas Portfolio
New York City Real estate investment trust General Growth Properties Inc., the second-largest U.S. mall owner, has replaced its chief executive and president with two directors, and puts its Las Vegas property portfolio on the selling block in an effort to raise capital to pay down its debt.
The company replaced CEO John Bucksbaum, son of General Growth founder Matthew Bucksbaum, with Adam Metz. Thomas Nolan has taken over the role of president, formerly held by Robert Michaels. However, John Bucksbaum remains chairman, and Michaels will remain COO.
General Growth also said it will sell its three luxury malls in Las Vegas: Fashion Show Mall, Grand Canal Shoppes and The Palazzo. Goldman Sachs and Eastdil Secured will be jointly responsible for marketing the Las Vegas properties to potential buyers.
The management shuffle comes after the company learned about loans that were made that did not follow company policy. General Growth had recently learned that an affiliate of a Bucksbaum family trust made unsecured loans to Michaels and Bernard Freibaum, former director and chief financial officer, the St. Louis Business Journal reported.
The loan was made “for the purpose of repaying personal margin debt relating to company stock,” according to a company press release. Michaels’ loan, of $10 million, was repaid. But Freibaum, who was let go before General Growth knew of the loan, still owes $80 million on his $90 million loan. General Growth said no company assets were involved in the loans, but that the loans did represent a break with corporate policy.
General Growth has expanded aggressively through acquisitions in recent years. It now owns more than 200 U.S. shopping centers throughout the United States. But its mortgage-financed strategy has left it extremely vulnerable, with few resources to pay debt that is coming due in the middle of the credit crisis.
Fashion Show Mall and The Palazzo are General Growth’s most pressing problem, with $900 million on their mortgages coming due Nov. 28, the Wall Street Journal reported. The company is negotiating for an extension with its lenders on that debt, but without an extension or new funding, General Growth doesn’t have the cash on hand to pay that debt, according to the report.
Lhermite joins Playlogic as manager of Game Factory
AMSTERDAM, Netherlands and NEW YORK Playlogic Entertainment announced that Olivier Lhermite joins Playlogic as managing director of its in-house development studio; the Playlogic Game Factory. Lhermite previously worked as group technical director at Electronic Arts on popular franchises like the FIFA, NBA and NHL series.
Dominique Morel, chief technical officer at Playlogic, said: “Olivier’s strong managerial background and vast industry experience will help us to embark on new exciting IPs and technological excellence.”
Whirlpool to cut 5,000 jobs
BENTON HARBOR, Mich. Whirlpool announced that in order to reduce costs, it has cut approximately 5,000 jobs across its global organization, including both jobs that have already been announced through plant closures along with new reductions taking place now and through the end of 2009.
In North America specifically, Whirlpool said the cuts would affect about 500 positions.
According to Jeff Fettig, Whirlpool chairman and ceo, the actions are expected to produce savings of approximately $275 million on an annualized basis. “While decisions to eliminate jobs and close facilities are very difficult, they are necessary to create a cost-effective business structure. These changes will ensure that our company is proactively taking the necessary steps to adjust its cost structure and production capacity to lower expected demand levels.”
Whirlpool’s staff reductions come after the company announced that earning from continuing operations decreased 7% to $163 million, or $2.15 per diluted share, compared to $175 million, or $2.20 per diluted share reported during the previous year’s quarter. Revenue of $4.9 billion for the quarter increased 1% from the $4.8 billion reported in the third quarter of 2007.
“We are in the midst of a rapidly changing and very challenging economic environment. We have seen a sharp drop in demand in North America and Europe during the third quarter, and we do not expect demand conditions to improve in the near term,” said Fettig, Whirlpool chairman and ceo. “Our third-quarter results were negatively impacted by declining demand and record levels of cost inflation. These unfavorable factors were partially offset by improved price/mix and productivity.
“The global credit crisis has had a profound negative impact on what was already a weakening and very fragile global economy. Declining home values, rising unemployment and very low consumer confidence levels will likely prolong a negative demand environment at least through the middle of 2009.”