Blackstone Group agrees to invest $500 million in General Growth Properties

Buyout firm Blackstone Group agreed Tuesday to invest $500 million in General Growth Properties Inc. as part of its bankruptcy plan, as the Securities and Exchange Commission opened a formal insider-trading investigation of some of the mall owner’s officials.

Blackstone reached the deal with the investor group financing the plan, General Growth said in a revised reorganization proposal in U.S. Bankruptcy Court in New York. General Growth also said it received notice in July that the SEC was investigating possible insider-trading violations by current and former officers and directors.

General Growth, owner of the Glendale Galleria, is scheduled to seek court permission this week to send the plan to creditors for a vote. New York-based Blackstone would get new common stock and shares in a new company that General Growth will spin off when it exits bankruptcy protection.

General Growth said the SEC investigation “is the continuation of an informal inquiry” started by the agency in October 2008. SEC spokesman John Heine declined to comment.

“General Growth intends to continue to cooperate fully with the SEC with respect to the investigation,” the company said in court documents.

General Growth, based in Chicago, described Blackstone’s participation as a “potential” investment in an earlier version of the plan. In the new version, General Growth also agreed to issue new notes to replace certain so-called Rouse notes. The company previously planned to reinstate $1.35 billion worth of the debt.