afr today, page-8

Thanks for posting that excerpt bourbaki12, and here is the article in its entirety for the Centronian readers:-

Source: www.theaustralian.news.com.au/business

Centro set to receive $2.3bn lifeline
Maurice Dunlevy | May 08, 2008

CENTRO Properties Group is tipped to receive a $2.3 billion domestic debt extension today, but the future of the debt-laden shopping centre giant remains on a knife edge after it was again suspended from trading yesterday.

Centro Properties Group and its retail trust were both placed in trading halts, with analysts expecting the group to detail longer-term debt extensions today.

That debt includes $2.3 billion owed to Australian lenders as well as another $US450 million ($475 million) in US private placement notes.

Centro Properties, which owns more than 800 shopping centres across Australia, New Zealand and the US, had been granted a seven-day extension that expired at midnight last night. Last week Centro revealed that only one local lender, owed less than $200 million, was yet to agree to a September 30 debt extension.

That "local" lender is Germany's WestLB regional bank, which had to be bailed out last month by a $US7.8 billion German government rescue package after big losses from the US sub-prime meltdown.

However, analysts believe WestLB, like other bank lenders, has reluctantly agreed to refinance the debts to avoid them being on its own balance sheet.

Centro's main local bankers are ANZ Banking Group, Commonwealth Bank of Australia, National Australia Bank and St George Bank.

It also has US bank creditors, including JPMorgan and Bank of America.

Without the debt extension, Centro faced the prospect of being tipped into administration, with the administrator likely to order immediate asset sales.

However, analysts warned yesterday that today's expected life-line would come at a cost, with the banks imposing serious penalty interest charges, possibly as high as 600 basis points.

"They're going to milk as much out of the business as they can," said one analyst, who declined to be named.

He said the refinancing would also involve stringent conditions that were likely to involve some asset sales. The debt extension sought by Centro effectively covers another $US450 million in US private placement notes, whose holders have agreed to act in line with Australian extension arrangements.

Complicating the picture are two other debt obligations of $US1.3 billion and $US1.2 billion, owed by Centro and Centro Retail Trust for their US joint venture.

Those debts had already been refinanced to September 30, but the extensions also were contingent on Centro's $2.3 billion debt, due on April 30, being refinanced.

Argo Investments managing director Rob Patterson said he hoped Centro would survive but he would not speculate on what the company was likely to announce in the next 24 hours.

Shaw Stockbroking head of research Brent Mitchell was confident all parties involved were working overtime to finalise documents and terms to extend facilities.

"I think when things run this long it does suggest that things are going to go through, otherwise they would have pulled the pin a long time ago," Mr Mitchell said.

"These things are never simple, but renewing the facilities is the best way to minimise loss."

He said major changes to Centro's property portfolio would take time, and a recovery in the property market was also needed.

With about $25 billion in assets under management, Centro is Australia's second-largest shopping centre owner.

Centro's troubles began after it borrowed heavily to pay for acquisitions to spearhead expansion, especially in the US.

It was caught out by the global credit crunch and struggled with the leverage on its 800-centre property portfolio..

Last December, Centro and its stable of companies admitted their difficulty in refinancing short-term maturing debt.

Centro is trying to pay down its debt by selling some of its portfolio, including stakes in two of its wholesale funds.


Ends.

Cheers, Pie :-)