Nick GardnerApril 19, 2008 12:00amTROUBLED Centro Properties is...

Nick Gardner
April 19, 2008 12:00am
TROUBLED Centro Properties is battling to secure an extension to the April 30 deadline for its $3.5 billion in debts with Australian banks.
Chief executive Glenn Rufrano yesterday told BusinessDaily that no extension had yet been agreed, and he was still working on finance agreements to meet the deadline.
However, he said the terms of the current finance options it had been offered were "not in the company's best interests", so he was still haggling with all parties.
If he cannot sort out financing in time, Mr Rufrano wants to extend the deadline to September 30, and possibly longer. "We will be working all day and night and over the weekend to reach a deal," he said.
"An extension until this time next year would be ideal, but initially we are asking for an extension until September," he said.
The company has around $5.5 billion in debt to Australian and US banks which has been constantly rolled over on short-term "bridging" agreements. Much of that debt was accrued last year when the company was rapidly expanding.
Until the debts are paid, the firm cannot distribute dividends to shareholders. Shares in the company have fallen from a high of $10.06 last May, but had fallen to 42 yesterday.
However, Mr Rufrano was upbeat, and said banks were being cooperative. "We are not being forced to pay down the debts or accept equity at the current rates," he said.
"We don't have an extension yet but we have goodwill with the banks and there is no reason for them not to work with us while we maximise the value of the business. There is definitely no fire sale on the agenda," he said.
Mr Rufrano said he needs time to sell some US shopping centres and is also looking to offload interests in some wholesale managed funds. The company hopes to repay $1 billion to $2 billion within months.
The banks are likely to agree, and the US banks have reportedly signalled they will extend their deadline if Australian banks do the same.
One good reason is that if banks were to pull the plug and appoint an administrator, it would render useless Centro's administrative arm which manages the US shopping centres, and earns some $200 million a year because it would lose its US status as a "responsible entity."
"The business is profitable. We just took on a large amount of debt just before the credit crunch and that is what hurt us," Mr Rufrano said.
Scott Marshall of Shaw Stockbroking, said: "I think banks would prefer to work with Centro to resolve the issues rather than face all the problems a liquidation would entail.
"Also, the properties it owns are generating sufficient income to cover interest payments, so the problem is not risk of defaulting on payments, it is the difficulty in refinancing the debt