centro plummets on debt extension talks...

Source: www.smh.com.au/business

Centro plummets on debt extension talks
Carolyn Cummins
August 25, 2008 - 11:15AM

Centro Properties' security price dropped as much as 16% at the opening of trade after the group revealed it has been forced to go back to its bankers seeking another extension to its deadline to repay a mountain of debt.

Although Centro has been meeting its interest repayments, as its shopping centres remain very busy, sentiment surrounding the stock has hit rock bottom.

Centro warned it could give no assurance that it would be able to win further debt extensions.

Investors said the fate of the country's second largest shopping centre owner and manager, was now firmly back in the hands of its bankers and creditors.

In late morning trading, the securities had recovered some of their losses but were still down 13.6% to 19 cents. Centro Retail Trust were up 2 cents to 33.5 cents.

As the group enters the Federal Court in Melbourne this morning, in front of Justice Ray Finkelstein, for a directions hearing involving two class actions, Centro's directors issued a statement saying that the group may have to sell "hybrids'' instruments, after rejecting proposals for new equity because the offers didn't provide an "acceptable outcome''.

It is the sixth extension the retail landlord has sought since last December, when it stunned investors with the news it was unable to repay its $4.5 billion debt. That sent the value of the securities down more than 60% in one day. They have lost more than 90% since revealing the debt problems.

The group has been embarking on an extensive asset sell down to raise the cash needed to meet the next hurdle of September 30.

However, the directors have now warned that no acceptable price has been received for its Australian assets and as a result they are not being forced to ask for a further debt roll-over.

The financiers gave the group until September 30 to assure them that cash would be coming in, at which point the bankers would extend the deadline until December 15.

"While the asset sale program will provide the Group with liquidity and some level of debt reduction, the Group considers that asset sales alone will not provide a long term recapitalisation solution,'' Centro said in a statement to investors.

"The group has also received and evaluated a number of proposals for new equity. The group, in consultation with its lenders, has concluded that no proposal received to date provides an acceptable outcome which is in the best interests of all relevant stakeholders. The group believes that, in particular given the current difficult capital market conditions, an acceptable proposal capable of being implemented by December 15 is unlikely to be forthcoming.

"In the absence of a recapitalisation solution in the short term, the group's objective therefore is to obtain longer term debt extensions from the lender groups beyond December 15 to provide a more stabilised environment for the recapitalisation process to be pursued over a longer time frame.''


Ends.

Cheers, Pie :)