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Simon Explores a General Growth Deal


Josh4580
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I am confused.  May be someone on this board can enlighten us with the meaning of "total return swaps with banks".

 

I always thought that if you hold equities in a company, you have to report the total position with the SEC if it's 5% or more.  So far, I can only trace 23mil shares.  Not sure how that ever equates to $400MIL in gain...  That's okay.  If a pumper is here to pump, I just thought he needs to get his facts straight....

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http://www.reuters.com/article/pressReleasesMolt/idUSTRE54R4O020090528

 

Ackman, whose hedge fund Pershing Square Capital Management LP owns about 25 percent of the Chicago-based mall operator, believes extending most of the company's $27.3 billion in debt for seven years would be enough to resolve its problems.

 

"What we propose is GGP simply extends the maturity of its debt for seven years. We think if they extend their debt for seven years, everyone comes out whole. There's no fire sale liquidation, the equity remains intact," he said.

 

In his letter he stated his average price was 83 cents per share. 

 

http://en.wikipedia.org/wiki/Total_return_swap

 

The TRORS allows one party to derive the economic benefit of owning an asset without putting that asset on its balance sheet, and allows the other (which does retain that asset on its balance sheet) to buy protection against loss in its value.
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http://www.reuters.com/article/marketsNews/idCNN1916836620091119?rpc=44

 

The company reached a deal with representatives of 70 loans -- ranging in size from tens of millions to more than $1 billion -- for extensions averaging six years, it said.

 

Ackman thought it would be 7 years, I guess he was off by only one year.  Not a bad estimate. 

 

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Josh, thanks for the link on the total return swaps (TRS).  I read through the description, but don't see how that TRS = Equities there.  Needless to say, that is a bet for Ackman.  After his performance at the Target annual meeting which left him in tears and crying to the press, this is somewhat of a redemption for him...

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