age centro deal hits a snag

Eli Greenblat
May 2, 2008

ONE creditor owed about $200 million — out of a total debt package of $7.4 billion — stands between embattled shopping centre owner Centro Properties Group and the promise of a lifeline until September 30.

Following Wednesday's announcement that Centro had secured an interim seven-day extension to negotiate with its financiers, the company released a detailed profile of its debt facilities to April 30.

It revealed that an unnamed creditor, owed less than $200 million, was the only member of the debt syndicate yet to completely agree to the terms. It said terms for a further, more substantial extension had been mostly concluded, subject to final documentation

"All of the other relevant financiers, comprising Australian lenders, US private placement noteholders and US lenders, have indicated their support for the longer-term extension and continue to work constructively to finalise these arrangements as quickly as possible by 7 May 2008," a statement issued last night said.

The company, which owns shopping centres across Australia and the US, owes a further $2.5 billion, due to be repaid before the end of the year. Total debt stands at $7.4 billion.

Centro said it hoped to extend part of its debt facilities to at least September 30. These comprised $2.3 billion owed to the Australian lending group and $US450 million to US noteholders.

It said of the debt that was due to expire on April 30, Centro Retail Group owed $1.2 billion associated with its US joint-venture partner. Other parts of the Centro empire also had debt due, with a total of $6.6 billion in various facilities originally expiring on April 30.

Merrill Lynch analyst Juan Sanabria said he believed an extension was likely, given the uncertainty Centro was facing, such as a weakening retail environment in the US and Australia.

JPMorgan analyst Rob Stanton said the market was still awaiting news of the potential sale of all or part of Centro's interests in two wholesale funds.

The market was also eager to know of the state of recapitalisation offers from new investors.