BANKERS to Centro Properties are expected to confirm today that they have thrown the retail landlord a five-month lifeline to recoup its debt and align its repayment with international creditors.
Centro has until the close of business today to repay $4.9 billion of debt, including interest. A further $2.5 billion will expire before the end of this year, taking its total 2008 debt exposure to $7.4 billion.
Centro's securities closed up 2.5c to 47.5c yesterday as it emerged that the company is believed to be in negotiations with two private groups for the sale of three of its top 28 centres that are part of its wholesale fund.
A Centro spokesman, Mitchell Brown, confirmed on Monday that individual assets were on the block as part of the group's refinancing program.
Salta Properties, which jointly owns Victoria Gardens in Richmond, Victoria, is looking at exercising its first right of refusal over Centro's half share, which is valued at about $91 million. Salta's directors declined to comment yesterday.
Bob Ell's Leda Holdings co-owns the other two assets, Centro Tuggeranong Hyperdomeand Centro Hervey Bay, worth a combined $254 million. It is expected Leda will also exercise its pre-emptive clause and could on-sell the Centro stake to another party.
Centro's chief executive, Glenn Rufrano, appointed in January to sort out the company's troubles, initially said he preferred to sell Centro's stake in its $2.6 billion Centro Australia Wholesale Fund, but the higher cost of debt has reduced buyers, and he has now succumbed to the bank's pressure to raise cash in any form.
Mr Rufrano has told investors that his three-pronged strategy is assets sales, a capital injection through the sale of all the group and/or a stake in its funds management businesses.
Analysts and fund managers said the bank's best course of action was to allow the five-month extension.
Refinancing the crippling debt comes at a time when the cost of capital has been squeezed by the global credit crisis, which has complicated the drawn-out discussions with its banking syndicate, which includes the National Australia Bank, ANZ, St George and the Commonwealth.
JP Morgan's research team, whose corporate department was previously Centro's key adviser, said yesterday that the company's statements suggested the bids for the wholesale fund had been unimpressive.
CNP Price at posting:
0.0¢ Sentiment: None Disclosure: Held
