General Growth Properties cut pricing by 50 basis points on its $3.65 billion term loan "A" and $500 million revolver. Based on leverage, pricing could be cut an additional 25 basis points. The change comes three months after the company replaced its $2 billion term loan "B" with a $2 billion term loan "C," cutting pricing by 25 basis points. That amendment ended two-and-half months of a repricing saga, which started with an April letter from GGP addressed directly to investors asking for a 50 basis point pricing cut.
With the September amendment, the facility now consists of a $3.65 billion term loan "A" and a $500 million revolver priced at LIBOR plus 2 1/4%, and a $2 billion term loan "C" priced at LIBOR plus 2%. "GGP did get the price cut, but they went about it the right way, through the underwriters," one buysider said. At press time, the "C" loan was trading around 101.152-101.5, according to Markit.
Tim Goebel, director of investor relations, said, "We had done a repricing in June, had gone through that process and if we could do it with that loan...there is a lot more to be gained by reducing pricing on [the term loan "A" and revolver]."
The company first approached investors in April, bypassing lead banks, Lehman Brothers, Credit Suisse First Boston, Bank of America and Wachovia Securities, and sending a letter asking for a 50 basis point cut on its term loan "B" in exchange for a 10 basis point fee. The loan had been trading as high as 101 1/2 prior to the letter, but was trading between 100 3/4 101 1/4 when they approached buysiders and many investors scoffed at the attempt (LMW, 4/22). In June, GGP again approached the market, but this time through the banks. Investors were split between those that objected to the reprice altogether and those that would accept a 25 basis point cut in exchange for 12-month call protection (6/10). To get the deal done, at the end of June, a $2 billion "C" loan replaced the $2 billion "B" loan priced at LIBOR plus 2%, with protection added requiring a 100% vote in order to do an additional repricing (6/24).