General Growth Properties Inc wants to replace its $400 million loan, issued last year to ensure the company could operate through bankruptcy, with one that would save it $2.7 million a month in interest payments.

The new loan would be at a fixed interest rate of 5.5 percent, replacing the original debtor-in-possession (DIP) loan which carried an interest rate of LIBOR plus 12 percent and had a 1.5 percent LIBOR floor, according to documents filed late Thursday in U.S. Bankruptcy Court in Manhattan.

General Growth has been able to secure less expensive financing since a group lead by Brookfield Asset Management Inc agreed to provide the No. 2 U.S. mall owner with more than $6.55 billion to bankroll the mall owner's exit from bankruptcy.

The group has placed $970.5 million in escrow pending the bankruptcy court's approval of the exit plan, according to court documents. That allowed General Growth to enter into a DIP credit agreement with Barclays Plc, according to court documents.

Like the first loan, the replacement DIP loan permits General Growth to repay the loan with stock, according to court papers.

The new loan is due to be discussed at a July 22 court hearing.

Shares of General Growth closed Friday up 2.6 percent at $13.77 on the New York Stock Exchange.

The original DIP loan was provided last year by a group which included Canpartners Investments IV LLC, Delaware Street Capital Master Fund LP, Farallon Capital Management LLC, Luxor Capital Group, Perry Principals Investments LLC and Whitebox Advisors.

(Reporting by Ilaina Jonas; Editing by Tim Dobbyn)

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