NEW YORK (Reuters) – General Growth Properties inc (GGWPQ.PK) on Wednesday unveiled a bankruptcy exit plan bankrolled by Brookfield Asset Management (BAMa.TO) that would split it in two, as the mall owner dug in its heels against a competing proposal.

Deals

Under the plan, Brookfield would invest $2.625 billion in General Growth, the no. 2 U.S. mall owner, in return for a 30 percent stake and the right to nominate three directors.

William Ackman, an investor and General Growth board member, would also offer Toronto-based Brookfield some protections and even share some of his profits with Brookfield under certain conditions.

The plan values General Growth at $15 per share, topping a $9-per-share offer by Simon Property Group (SPG.N). It would repay holders of about $7 billion of unsecured debt in full with interest. Under the plan, unsecured creditors would be paid in cash and stock, but General Growth also hoped to raise up to $5.8 billion more to repay these unsecured creditors in cash.

Also on Wednesday, Simon signed a non-disclosure agreement with General Growth that would give it access to the mall owner’s books, a source familiar with the situation said.

General Growth’s proposal drew some skepticism, with one investor saying public markets would want more information before they invested. General Growth’s shares closed down 0.62 percent at $12.89, below the plan value.

“We’re talking about very large numbers to make this work,” said Robert Gadsden, portfolio manager at Alpine Realty Income & Growth Fund, which owns GGP shares. “Frankly, from both the unsecured bondholders standpoint and any new equity there’s more question marks here.”

The plan does not say who would run the company, what malls it would eventually own, and if John Bucksbaum, the heir to the founder and current chairman, will be a board member.

The plan to exit bankruptcy, which comes a week before a crucial court hearing on March 3, sets the stage for what could turn into a bidding war for the bankrupt mall owner, whose more than 200 malls include Fashion show in Las Vegas, Ala Moana Center in Hawaii and Faneuil Hall Marketplace in Boston.

“I don’t think David Simon is going to say it’s his best and final (offer),” Gadsden said. “It was a start.”

Another real estate investment trust investor who did not wish to be named because of conflicts said he believed the proposal outlined on Wednesday was intended to support a request to the bankruptcy court to extend the time General Growth has when it alone is allowed to present a plan to emerge from bankruptcy.

“If the equity holders can point to a bona fide offer for the equity, which is meaningfully above what’s Simon’s offering, then they’re likely to be successful in extending the exclusivity period for 30 to 60 days and freezing Simon out for another couple of months at least,” the investor said.

Both the Official Committee of Unsecured Creditors and Simon on Wednesday filed objections to the extension, which will come before the judge during next week’s hearing.

GENERAL GROWTH OPPORTUNITIES

The exit plan calls for existing General Growth shareholders to receive shares valued at $5 each in a new company, General Growth Opportunities. the new company would house noncore assets, such as the master planned communities and some developments like South Street Seaport in new York.

Brookfield would invest $2.5 billion at $10 per share for new General Growth shares and up to $125 million at $5 per share for General Growth Opportunities common stock. It would get as much as a 7 percent stake in General Growth Opportunities.

General Growth, which filed for bankruptcy in April, would try to raise additional capital through a combination of means, including about $2.8 billion of equity, $1.5 billion of new debt and $1 billion of joint venture and other asset sales.

Simon has offered to pay the unsecured creditors cash, which could be a key to whom the bondholders back.

As consideration for acting as “stalking horse” in the company’s process to raise capital, Brookfield would receive seven-year warrants to purchase 60 million shares at an exercise price of $15 per share.

Until the warrants were approved by the bankruptcy court, Ackman’s Pershing Square Capital Management would provide interim protection to Brookfield.

If General Growth completed a transaction with another party at more than $12.75 per share, Pershing Square would pay Brookfield 25 percent of its profits from its investment in General Growth above that value.

The support being offered by Ackman is something of a role reversal for the hedge fund manager. In the past he has been cast as an activist outsider, trying to pressure companies to change strategies, as he did in 2006, when he persuaded Wendy’s International to shed its Tim Horton’s doughnut chain. Now in the takeover battle for General Growth, he is very much the insider, controlling a 25 percent stake of the company, as well as being on its board.

UBS and Miller Buckfire & co advised General Growth, while Goldman Sachs and Barclays Capital advised Brookfield.

Simon closed down 0.5 percent at $77.53. Brookfield was off 0.5 percent at C$24.04.

(Editing by Maureen Bavdek and Steve Orlofsky)

General Growth eyes split, Brookfield investment