General Growth Properties Inc., owner of the Maine Mall in South Portland, said it plans to split itself into two companies with the help of $2.625 billion in funding from Brookfield Asset Management Inc., setting off a bidding war for the nation’s second-largest mall operator.

The plan, which requires a bankruptcy judge’s approval, would give equity holders in the mall operator $15 a share for stakes in the two companies — essentially a ”good” company that holds about 200 shopping centers and a ”bad” company that holds General Growth’s riskier investments. Unsecured creditors would be paid in full with interest.

The complex plan follows an unsolicited $10 billion bid from rival mall operator Simon Property Group Inc. last week. That plan would likewise pay unsecured creditors in full and give shareholders $9 a share.

General Growth described Brookfield’s funding as a ”cornerstone investment” that would give the Chicago-based mall operator support to raise up to another $5.8 billion needed to exit Chapter 11 bankruptcy.

The Brookfield-sponsored recapitalization ”provides a strong financial foundation for the future,” said General Growth CEO Adam Metz. ”In addition, (General Growth) shareholders will be able to participate in the value-creation opportunity presented by this plan.”

In most Chapter 11 reorganizations, there isn’t enough money left for shareholders after paying the creditors, who under the law are first in line.

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Under the terms, Toronto-based Brookfield would own about 30 percent of General Growth.

Shareholders would receive one new General Growth share worth $10 plus one share in a separate company called General Growth Opportunities with an initial value of $5.

General Growth filed for Chapter 11 bankruptcy protection in April.

 


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