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Citi Plays Hardball With GGP

Details creep out about the weekend's negotiations over General Growth's debt extension.

Citigroup last week scuttled a proposed nine-month extension of General Growth's payment deadline on $900 million in debts by withholding its approval and demanding a concession on a different loan in return, according to people familiar with the talks. Six other banks had agreed to the nine-month extension of the Nov. 28 deadline, making Citigroup the lone holdout, these people say.

When General Growth and Citigroup couldn't resolve their issues, the group on Sunday settled for a two-week extension to sort out the issue. If the banks don't approve a further extension by the new, Dec. 12 deadline, they could declare General Growth in default on that debt, triggering cross defaults on other General Growth debts and forcing the company to seek bankruptcy protection. Representatives of Chicago-based General Growth and Citigroup declined to comment.

In another twist to the Citigroup-General Growth saga, Citigroup disclosed Thursday in a Securities and Exchange Commission filing that it had bought 14.2 million General Growth shares, amounting to 5.3% of the total. That purchase is tied to an accumulation of the company's stock by Pershing Square Capital Management LP, a hedge fund controlled by William Ackman.

Pershing reported late last month that it had acquired 20.8 million General Growth shares, or 7.5% of the total, and had lined up swap contracts with Citigroup, Morgan Stanley and UBS AG to potentially buy more. Morgan Stanley reported earlier this week that it had bought 5.1% of General Growth's shares.

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