centro gets another breather, page-2

And here it is in full breezefly:-

Source: www.theage.com.au

Centro gets another breather
Carolyn Cummings
May 8, 2008 - 5:39PM

Centro Properties has confirmed that its Australian financiers and US private placement noteholders have agreed to extend its debt maturities to December 15 this year.

The agreement covers $2.3 billion owed to the Australian lending group and $US450 million ($480 million) owed to US private placement noteholders.

In a statement issued seconds after the close of trade, Centro's chief executive Glenn Rufrano said that to ensure the deal goes through, Centro and certain of its wholly owned subsidiaries had provided security by way of fixed and floating charges and some US real estate mortgages to the Australian financiers, US private placement noteholders and US lenders.

Centro will commence trading tomorrow morning and already there is an indicative bid in the system at 75 cents. Before it went into a trading halt on Wednesday morning the price was 47 cents on thin trade.

Investors will welcome the decision which will take away the uncertainty surrounding Centro since it hit its troubles on December 18, 2007.

But analysts warned the risks were still high.

"Nothing has changed in the fundamental view,'' said Justin Blaess, director of property securities for ING Investment Management. "The company is highly geared, it's in a distressed state, and it's got deadlines looming which could decide the fate of the company, at a time when markets are weak, debt costs are high and there are more sellers than buyers in real estate markets.''

Centro, which owns about 700 US shopping malls, borrowed heavily last year to fund a rapid expansion in the US, but ran into trouble in December after credit markets dried up, closing its usual avenues of borrowing and putting it under pressure to sell assets to raise cash.

Mr Rufrano said the extension arrangements are subject to certain conditions being met by May 30 for the finalisation of an additional liquidity facility - totalling $155 million - and will cover Centro's interests in certain managed funds.

This was the fifth such move by Centro's long-suffering banks, which only a week ago agreed to roll over the deadline to yesterday.

It was suggested yesterday that West LB was adamant it would not sign off on Centro's rescue until it was satisfied that the underlying business was strong enough to service its mountain of debt.

WestLB recently disclosed a $US2.5 billion net loss.

Mr Rufrano has consistently said his plan is to sell assets, either individually or through the divestment of Centro's stake in its Australian and US wholesale funds, or even the sale of the whole business. Already buyers are lining up for a number of the group's centres, although they are becoming frustrated because Centro's bankers want to keep the better centres in the business as collateral.

Mr Rufrano said yesterday that offers received for the Centro Australia Wholesale Fund (CAWF) have been reviewed and management has revised the marketing strategy to include selling CAWF properties in smaller portfolios and/or individually. Discussions are continuing with a number of parties on this revised basis.

The German bank's demands centre on sales figures for all Centro's shopping centres and some assurance that its assets are saleable at market prices, not through fire sales.

One suggestion was that if no agreement can be reached, the very last resort would be to have the rest of the syndicate bail out West LB from its exposure to Centro.

Goldman Sachs JBWere said the extension to December 15 would coincide with a US and European extension date of September 30.

"If WestLB successfully lobbies out of the extension agreement, as it, too, struggles with its own net loss, it could mean that Centro or the other banks will have to pay its claims, or that Centro will end up in the Australian equivalent of bankruptcy court,'' the broker said.


Ends.

Cheers, Pie :-)