centro rescue package a close call...

Source: www.theaustralian.news.com.au

Centro rescue package a close call on sealing deal by deadline
Anthony Klan and Turi Condon | February 14, 2008

A RESCUE package will come down to the wire for the beleaguered Centro Properties empire, which is yet to reach final agreement with bankers to extend tomorrow's deadline to repay $3.9 billion in short-term debt.

Centro spokesman Jim Kelly said Centro and Centro Retail Trust had not yet been granted an extension to repay the debt and the group remained locked in discussions with its Australian and US lenders.

"We are obviously hopeful an agreement will be reached but it's not a decision that's in our hands," Mr Kelly said yesterday.

Although the lenders were yet to sign off on an extension, Centro is expected tomorrow to announce its success in securing an extension of at least two months to enable the group to sell assets and avoid receivership.

Centro is trying to sell either the whole group or its half-share in the $4.8 billion Centro Australia Wholesale Fund and its 45per cent stake in the $1.2billion Centro America Fund. The group has chosen a short-list of four parties interested in its stake in the Centro Australia Wholesale Fund. While the sales process of Centro's stake is most advanced, it will be unlikely to announce a winning bidder on that until adviser Lazard Carnegie Wylie has explored other avenues of paying down debt.

Centro is understood to have acted quickly to secure bids on the Australia Wholesale Fund so as to use those bids to strengthen its case with lenders for an extension on its short-term debt.

It is believed Centro initially sought non-binding bids for the Australia Wholesale Fund in the first round of offers.

This would have the likely effect of drawing more, and possibly higher, offers that the group could use to bolster its case for a debt extension.

One bidder on the Australian Wholesale Fund who declined to be named said there was a handful of standout properties with the balance of the 25 centres in Centro's Australian wholesale fund "pedestrian" neighbourhood centres. The deteriorating property market will make it increasingly difficult to sell the Australian wholesale fund's assets at the current book value, he said.

The prize assets are The Galleria in Perth with a book value of $290 million for the fund's half-share, The Glen in Melbourne ($200 million for 50per cent) and Colonnades in Adelaide ($200 million for 50 per cent). The rest of the centres are owned by the listed Centro Retail Trust.

Among those rumoured as potential suitors for the Australian wholesale trust are the acquisitive Industry Superannuation Property Trust, which manages $7.5 billion of industry superannuation fund and Singapore's giant CaptiaLand.

Malaysian conglomerate Mulpha and an unnamed Middle East buyer are among those thought to have some interest the Centro's head stock, Centro Properties Group.

Centro Properties shares closed yesterday at 61c, down 1c. Centro Retail Trust was down 1.5c to 41c.


Ends.

Cheers, Pie :-)