Teacher Retirement System of Texas, Austin, was allowed to invest $500 million to help General Growth Properties, the second-largest U.S. mall operator, finance its exit from Chapter 11 bankruptcy protection.
U.S. Bankruptcy Court Judge Allan Gropper in New York on Wednesday approved a plan for the $96.7 billion system to buy $500 million of shares in the reorganized General Growth at $10.25 a share.
“I will approve the agreement as a reasonable exercise of the debtors’ powers under the bankruptcy code,” Mr. Gropper said. There was no opposition to the investment.
The pension plan is joining Brookfield Asset Management, Fairholme Funds and Pershing Square Capital Management to finance GGP’s exit from bankruptcy protection, which is set for October.
Under the plan, Brookfield, Fairholme and Pershing have agreed to buy $6.3 billion of stock in the reorganized company at $10 a share in addition to other commitments. The pension plan will hold a 4.9% stake in GGP when it emerges from bankruptcy, and the other three investors will receive 62.8% before the exercise of warrants, according to court documents.
The Texas fund’s investment will reduce the other investors’ total $8.55 billion investment by $500 million, lawyers for GGP said.
The agreement approved Wednesday includes a $15 million breakup fee.
Under the agreement, GGP can reduce the Teachers fund’s investment by as much as 50% if more favorable financing becomes available.
