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Centro Property Group's salvage talks still going onFont Size: Decrease Increase Print Page: Print Bridget Carter | December 16, 2008
Article from: The Australian
AUSTRALIAN banks were still locked in talks last night over Centro's rescue plan.

The talks continue amid expectations the banks would extend its deadline to pay back about $6 billion worth of debt to March next year.

Centro Properties Group yesterday requested a trading halt until tomorrow morning.

The shopping centre owner's deadline to pay back almost $6 billion expired at midnight last night.

The total owing on the three corporate loan facilities has climbed from about $4.95 billion in September to almost $6 billion due to currency fluctuations, although some of that is protected by various hedging arrangements.

Analysts expected the deal would be signed to roll over the debt for the struggling shopping centre owner for three months.

One said that key financier Commonwealth Bank of Australia would use the deadline to improve its position relative to other banks.

He said the banks could not afford to let the shopping centre owner fail.

If Centro's debt deadline is granted, it will be the fifth extension to pay back the huge sum of money in one year.

Talks in Melbourne over the weekend were understood to have focused on a stabilisation plan, which was proposed by Centro's chief executive in October, and also the value of each lender's loans to the company.

The plan was proposed in a New York meeting that CBA did not attend.

Centro has been also trying to persuade the Australian banks to convert some of the debt into a hybrid security, which would later switch to equity.

It is understood it is just the Australian banking syndicate yet to give a debt extension the go-ahead.

The 12 US insurance companies, which are note holders, and the US syndicate are backing a debt rollover.

Centro's Australian-led banking syndicate includes CBA, which has about a $200 million unsecured exposure, National Australia Bank, which is nearly $680 million and ANZ is about $200 million.

CBA holds the biggest secured position at around $1.04 billion.

Other parties in the Australian syndicate include Germany's WestLB, BNP Paribas, Sumitomo Mitsui Banking Corp, JPMorgan and Royal Bank of Scotland.

Names among the US syndicate are Wachovia, Key Bank, JPMorgan and Bank of America.

The company owns 777 shopping centres in Australia and the US.

So far the company has collected more than $400 million from shopping centre sales.

Centro struck trouble a year ago, after the company, which had a gearing level of about 70 per cent, admitted it had been unable to refinance $3.9 billion worth of maturing debt, slashed profit forecasts and froze withdrawals from two of its managed funds.

Centro Properties securities dived as a result. They last traded at 8.7c.