Ahead of the hearing scheduled for March 3 to determine whether General Growth Properties Inc. will receive more time to work on its reorganization plan, the company laid out its restructuring activities in its 2009 Form 10-K released March 1.

The company explained that it devised a long-term business plan to realize the objectives it set out to achieve through the Chapter 11 bankruptcy process that involves the continued operation of retail shopping centers, divestiture of noncore assets and businesses and certain nonperforming retail assets, and select development projects.

"We have pursued a deliberate two-stage strategy," the company said. The first stage involves the restructuring of the property-level secured mortgage debt, and the second stage is the restructuring of the debt of the parent-level companies and the public entity.

As of March 1, General Growth said 205 "track 1 debtors" owning 108 properties with $10.65 billion of secured mortgage debt have restructured that debt such that it matures at various dates after Jan. 1, 2014, and those debtors have emerged from bankruptcy. The company has identified 13 of the track 1 debtors with $751.7 million of secured mortgage debt as nonperforming retail assets; it has also identified three properties — Silver City, Montclair and Highland — owned by its unconsolidated real estate with approximately $457.4 million of secured mortgage debt, of which the company's share is $230.1 million, as nonperforming assets.

The company said it continues to pursue consensual restructurings for the remaining secured debtors, known as 2010 track debtors, and will seek bankruptcy court approval of nonconsensual restructuring plans for those loans in the event it is unable to reach an agreement with the lenders. No agreements have been reached with respect to $2.50 billion of secured debt and $6.51 billion of unsecured debt, and the company does not yet have a filed or confirmed plan of reorganization for the 2010 track debtors. In addition, its share of the secured mortgage debt of its unconsolidated real estate affiliates maturing in 2010, excluding the Woodlands master planned community and Brazil loans, is $513.8 million, of which $78.3 million has been extended to 2014, and it has not yet restructured or refinanced this secured debt.

"While completion of the restructurings of the property-level debt remains a priority, we believe that we have achieved substantial progress with respect to the first phase of our restructuring strategy and are now in the midst of the second phase — resolving the TopCo Debtors' capital structure," General Growth said. "Resolution of the TopCo capital structure involves reducing corporate debt and overall leverage and establishing a long-term capital structure."

The company said its long-term business plan projects that it will need approximately $1.5 billion of new capital to emerge from bankruptcy and restructure on a stand-alone basis, and it noted that it has commenced a process to explore all potential alternatives for emergence, including an evaluation of the financing sources for a stand-alone restructuring and a potential merger and acquisition or other change of control transactions with financial and strategic investors.

General Growth outlined its agreement in principle with Brookfield Asset Management Inc., which would involve, among other things, the company being split into two companies and an investment by Brookfield of $2.5 billion in General Growth and up to $125 million in cash in the new second company, which would be called General Growth Opportunities. That agreement, the company noted, is subject to, among other things, approval by the bankruptcy court and better offers pursuant to procedures the company will ask the bankruptcy court to approve. "The Company is focused on continued progress in the Chapter 11 Cases and a comprehensive capital raise process, and will continue, notwithstanding the agreement in principle, to consider all alternatives to maximize value for all of the Company's stakeholders," it said.

Much hinges on the decision to be made tomorrow as to whether General Growth will receive an extension to its exclusivity period. If the court denies the motion, General Growth will have seven days following the entry of an order before its exclusivity expires.

"If we do not file a plan of reorganization for the 2010 Track Debtors prior to the lapse of the exclusivity period, any party in interest would be able to file a plan of reorganization for any of the 2010 Track Debtors," the company said.