CENTRO Properties Group has moved closer to a carve-up of its $26.6 billion shopping centre empire, having appointed the investment firm Lazard Carnegie Wylie to advise it on a fire sale of assets or find other ways to secure financing to satisfy its lenders.
The group also hired the accounting firm KPMG to help it negotiate the refinancing of $3.9 billion in debt, and appointed Freehills as legal adviser as it faces possible class actions from investors who lost billions of dollars in last week's rout.
Centro's bankers have given its chief executive, Andrew Scott, a February 15 deadline to develop a strategy that will save the company from insolvency, after it got caught out by the global credit crunch following its more than $10 billion international expansion over the past two years.
The company's long-term adviser, JPMorgan, whose executive chairman, Andrew Pridham, was one of the architects of Centro's ambitious expansion strategy, wasn't mentioned as an adviser for the restructuring.
The property trust shocked the market on December 17 when it suspended its dividends and said it was struggling to refinance $1.3 billion of short-term loans. The revelation wiped more than $4 billion from Centro's market value last week, cutting its share price to as low as 42 cents from $10.02 in May. Other property stocks also plummeted, giving the sector its worst day since the 1987 market crash.
Centro has flagged it would consider options including selling stakes in its tangle of property funds, selling some of more than 800 shopping centres in Australia, New Zealand and the United States, or issuing new equity. While Mr Scott said last week that the company would not be forced to a fire sale, property industry experts reckoned it would have to make disposals to remain solvent.
"Asset sales is really the main driver of getting them out of this predicament," a fund manager, Winston Sammut of Maxim Asset Management, told Bloomberg last week. With demand for Centro's 682 shopping centres in the US likely to be hampered by the collapse of the subprime mortgage market, "one would have to look at the Australian assets as probably the most appropriate to sell", he said, citing Stockland, GPT Group and Colonial First State Retail Property Trust as possible buyers.
Centro's share price closed 1c higher at $1.13 on Christmas Eve, while its listed offshoot, Centro Retail Trust, rose 7c to $1.07 amid the speculation about asset sales.
The company needs to raise at least $1.4 billion in cash to stay afloat, which could be achieved by selling its 25 per cent stake in Centro Retail and its interests in two unlisted US and Australian shopping centre funds, according to analysts at Merrill Lynch.
Meanwhile, Centro was eager to assuage concerns about its dozens of property syndicates, or bundled direct property investments.
Most of the syndicates were "appropriately geared", with the debt secured against their various properties, meaning they were "not related to the financing issues" of Centro and Centro Retail, it said
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