centro to get more time

STRICKEN shopping centre operator Centro will reveal this morning that its bankers have given it more time to find a solution to its troubles.

The group, which went into a trading halt on Friday, will then resume trading.

On December 17, Centro told the stock exchange its banks had given it until February 15 to come up with a plan to refinance $3.9 billion in current debt.

In its announcement Centro is likely to reveal other developments in its struggle to survive.

Company spokesman Jim Kelly declined to comment yesterday other than to say the debt-laden group would not be announcing it was going into administration.

Adding to the company's woes, analysts at financial services group Citi yesterday slashed their target price for Centro scrip from $2.33 to $1.04 because the company might be a "distressed seller" of assets.

Centro last traded at 86c.

Citi, which still rates Centro a buy, has applied a 65 per cent discount to the book value of the company's US shopping centres, which are suffering from a downturn in the US retail industry.

The Australian shopping centres owned by Centro are better quality and should sell at a 15 per cent discount to their book value, Citi said in a research note.

Centro put itself on the auction block two weeks ago, inviting expressions of interest from companies interested in buying some or all of Centro's $26 billion worth of managed funds or backing a recapitalisation of the group.

Market speculation has centred around a possible rights issue for existing shareholders.

But market sources said the company was unlikely to announce a deal today.

The high cost of Centro's assets and the complexity of the company's funds structure are believed to have put off some potential bidders, with Commonwealth Bank subsidiary Colonial First State already out of the race.

Centro owns 124 shopping centres in Australia and about 700 in the US.

It has total debt of $17.9 billion, held in both the company and a complex series of inter-connected investment trusts.