Bad news piles up for Elk Grove Promenade developer

Front page Wall Street Journal story notes GGP's woes and questionable executive dealings; credit downgraded again

If you are a member of General Growth Properties (GGP) founding Bucksbaum family, you know you're not going to have a good day when you open the Wall Street Journal and see a front page story about your family's mall empire titled "Dark Days for Mall Dynasty."

Along with the details of how the Buscksbaum's got into their current financial mess, the story reveals sordid details of unethical, though legal, practices company executive were involved in:

The stock plunge set off a second crisis: Top executives had to dump millions of their General Growth shares to cover margin calls. Many executives had borrowed heavily to buy General Growth stock. Mr. Freibaum bought 7.6 million shares -- more than 3% of General Growth's total -- mostly on margin.

The Bucksbaum family's trust loaned Mr. Freibaum $90 million and President and Chief Operating Officer Bob Michaels $10 million to meet the margin requirements without dumping stock. Any executive sale of stocks would have had to be publicly disclosed, which could have spooked investors and led to more selloffs. The board said it had no knowledge of the loans.

Moving past the executive suite shenanigans of the Bucksbaum's and other executives, GGP was the recipient of more bad news - it's credit has again been downgraded. A downgrade in credit means high cost to borrow money, if it at all can be borrowed.

This time it was the Fitch Ratings Inc. that said a "default of some kind appears imminent."

The rating service lower GGP's debt to "C," junk status, from "B."

GGP is the developer of the Elk Grove Promenade who's construction has been stalled for five months and completion date is uncertain. It was to have been opened in time for the 2008 Christmas shopping season.