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Tucson Mall owner General Growth warns of possible bankruptcy

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Shares in General Growth Properties Inc., owner of Tucson Mall and Park Place mall, plummeted Tuesday after the company warned it faces solvency trouble and may be forced to file for bankruptcy if it can't refinance or extend nearly $1 billion in debt due next month.

The real estate investment trust (REIT), the nation's second-largest mall owner whose big-name holdings include Chicago's Water Tower Place and Fashion Show in Las Vegas, also disclosed in a regulatory filing late Monday that it may default on certain debt obligations.

Making matters worse is another $3.07 billion in property and corporate debt slated to come due next year.

Nicole Spreck, a spokeswoman for General Growth, said the company would continue to operate and "look forward to a prosperous holiday season."

Spreck would not provide specific information about how the possibility of filing for bankruptcy protection would affect its Tucson properties.

Reading from a prepared statement, Spreck said General Growth would work with its advisers to generate revenue from asset sales, joint ventures, corporate-level capital infusion and strategic business combinations, as well as other sources.

Clifford Altfeld, a Tucson bankruptcy and real estate attorney, said even if General Growth does file for bankruptcy, it doesn't mean shoppers will see changes at the malls. The major financial issues would involve the company's bank creditors and not necessarily affect the malls' tenants, he said.

"It is possible that other problems General Growth may be having don't affect the Tucson properties," Altfeld said. "If that's the case, we might see very little change."

In filing with the Securities and Exchange Commission, Generla Growth said that amid continued weakness in the retail and credit markets, it can't assure it can restructure its debt or negotiate a short-term cash infusion.

"Our potential inability to address our 2008 and 2009 debt maturities in a satisfactory fashion raises substantial doubts as to our ability to continue as a going concern," the Chicago-based REIT said.

General Growth, beset by falling funds from operations and plagued by a tightening global credit market that's making it difficult for companies to obtain financing, is trying to sell off properties and cut costs to weather the rocky economic climate. It has also suspended its dividend and ousted a cadre of top executives. But that hasn't calmed investors, who've sent the company's shares into a virtual free-fall since September.

After filing the quarterly report late Monday, the company's shares shed another 64 percent Tuesday, reaching an all-time low of 33 cents per share before recovering slightly.

Citigroup analyst Michael Bilerman said General Growth's equity holders may still be at risk, even if the company opts not to file for bankruptcy protection.

"There is no quick fix in the current capital-constrained environment," he told investors late Monday.

General Growth dropped 14 cents to 35 cents in New York Stock Exchange composite trading. It was the fourth consecutive day of declines for the Chicago-based company. Tuesday's decline was its biggest since General Growth's April 1993 initial public offering.