Deal allows Centro to come up for air Carolyn Cummins May 9, 2008
CENTRO PROPERTIES has won more breathing space after its financiers gave it until December 15 to clear its mountain of debt and get its operations back on track.
But under the plan Centro has to meet several conditions by May 30, including finalising a $155 million "liquidity facility" to pay for capital expenditure, adviser fees and higher lender costs. Centro has already obtained $55 million from its financiers and is seeking another $100 million.
If the conditions are not met, a company statement said yesterday, all bets are off and the December 15 deadline is irrelevant.
The group confirmed that it had received offers for some of its assets, although prices had varied and in some cases did not reflect market values. There are also capital gains tax issues with some jointly owned properties.
Winston Sammut, the managing director of Maxim Asset Management, said the deal was a "step in the right direction, but uncertainty still prevails".
A statement from Centro's chief executive, Glenn Rufrano, said: "The facilities are comprised of the following: $2.3 billion in aggregate owed to the Australian lending group; and $US450 million [$478 million] owed to US private placement noteholders.
"In connection with these arrangements, Centro and certain of its wholly owned subsidiaries have 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 continues to proceed with the strategic planning process it previously announced.
"If the above issues are not finalised by May 30, 2008, the further extension arrangements may be terminated.
"In such circumstances, the financiers would lose the benefit of the security which Centro has granted to them in connection with these extension arrangements."
Close to six months ago the group's former chief executive, Andrew Scott, revealed that Centro, the country's second-largest retail landlord, would not be able to meet its $4.9 billion debt deadline.
Before the admission, the price of Centro securities was near $8, giving the group a market value of close to $6.8 billion. Now its market value is $397.2 million.
Centro and its associate, Centro Retail Trust, will resume trade today after a two-day suspension. Before the halt, Centro's price was 47c and yesterday there was an indicative bid of 75c, while Centro Retail Trust's price was 58c.
But after four extensions to repay the debt, the new management - led by Mr Rufrano, an American - received the final approval late yesterday, after assuring all its bankers it would abide a number of stringent conditions to ensure the money will be paid.
Ends.
Cheers, Pie :-)
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