centro chiefs still locked in survival talks..

Centro chiefs still locked in survival talks with lenders

Carolyn Cummins
November 29, 2008

THE embattled Centro Properties Group has entered potentially the last month of its existence and must get approval from its bankers to extend the multi-billion dollar debt deadline or go into receivership, its chairman, Paul Cooper, told shareholders yesterday.

But property analysts said that because the group's underlying sales growth was close to 7 per cent, it was in the lenders' interest to roll over the debt and allow Centro to trade out of its difficulties.

At the annual general meeting in Melbourne, Mr Cooper said he and the chief executive, Glenn Rufrano, were in continual discussions with lenders in the United States and Australia to secure the survival of the group before the December 15 deadline.

Centro has about $2.3 billion of debt that must be rolled over by December 15, as well as $US450 million ($688 million) owed to private US-based noteholders that will also fall due.

"In the event that the lending group does not extend the agreements, Centro would be in default of its debt covenants. The implications of this potential scenario include the possibility that Centro will be placed into administration or receivership," Mr Cooper said. "The question of whether the banks will agree to extend their debt agreements with Centro needs to be resolved by 15 December.

"We are currently in constructive discussions with the lending groups and will make an announcement in regard to the extension as soon as the outcome is known."

Centro, the country's second largest retail landlord after Westfield, was the first victim of the credit crunch. On December 17 last year, its former chief executive and founder, Andrew Scott, announced that the group was unable to refinance maturing debt facilities on a long-term basis, which led to a subsequent reduction in share value.

In that time Centro has lost close to 98 per cent of it market capitalisation and closed yesterday down 20.5 per cent to 6.3c, compared with $10 a year ago.

Mr Scott left the group in February with a $3 million exit package. He was replaced by Mr Rufrano, who has been leading the talks with the banks.

Mr Rufrano's contract expires in January but he said at the meeting he had agreed to continue with Centro beyond the current contract and provide continuity into next year. But he will be moving back to the US, so the length of his tenure will be determined next year.

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