The GGP drama is finally nearing its end and time is running out to jump aboard the Howard Hughes Corporation prior to its spinoff from General Growth Properties (GGP). With GGP’s emergence from bankruptcy around the corner, the company announced November 1st as the date for distribution of shares of the two separate publicly traded corporations. According to the plan, shareholders will receive .0983 of a share of Howard Hughes for every share of the ‘old’ GGP they own. The company also filled out its management team, by naming Sandeep Mathrani, formerly President of the retail division at Vornado Trust, as its new CEO.
On the spinoff side, Howard Hughes has filed for an IPO. The company will offer 22.3 million shares for sale and warrants for the purchase of up to 8 million shares leaving the total shares outstanding at 37.7 million (not including the warrants). Apparently, Blackstone Real Estate Partners VI LP and other investors have agreed to buy shares at $47.62 – perhaps establishing a share price benchmark. The company will trade under the ticker ‘HHC’.
Disclosure: Author currently owns no shares in any stock mentioned
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- UPDATE 1-New GGP files for $8.14 bln stock, warrant sale (reuters.com)
Well…it looks like management at both the parent and spinoff will be motivated. GGP’s new CEO’s (Sandeep Mathrani) pay package has been released and he will be receiving a $1.2m salary in addition to a $1 million signing bonus. His annual bonus can be up to $1.5m. Additionally, as the new job requires a relocation to Chicago, he received a $350K relocation allowance. Not bad for a company fresh out of bankruptcy, but nothing too crazy for CEO’s these days.
That is not all though. The real money and upside comes from the 1.5 million units of restricted stock he will receive and options to purchase an additional 2 million shares at the price of $10.25/share. As the WSJ blog points out, if GGP trades at $15 post-bankruptcy exit the 1.5 million share grant is worth over $22 million alone! Sounds like a motivating incentive to me and just what investors want to see. Hopefully, it wont lead to excessive risk taking though.
Another perq mentioned includes the purchase of a new car every three years. Mr. Mathrani is expected to assume the position in January and in the meantime he will work as a ‘consultant’ to the company.
Here is a link to the WSJ blog: http://blogs.wsj.com/developments/2010/11/01/new-ceo-at-general-growth-properties-gets-his-payday/