article 1 of 2 articles in afr today...

TP Note: I found this comment very interesting because:-

a) I didn't know that was happening and I do like to keep myself informed; and

b) there could be a significant transaction occurring (or about to occur) with financiers approval required imo:-

"It's understood Centro's Australian banks are meeting today, but whether it's just to review the 2008 accounts before they are approved by the boards for public release or if there's something else on the agenda isn't known."
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Source: The Australian Financial Review newspaper [Pages 80, 73]
Date: Thursday 21 August, 2008

Privateers circle troubled Centro

The latest Securities and Exchange Commission filing by the US-based Centro NP entity indicates the extent of stress on the group as it restructures to provide its bankers with more comfort at the same time as a slowing US economy is eating into revenue.

Although presented as a bit of a boilerplate statement under the obligatory "risks" heading, Centro NP's acknowledgement that due to covenants in certain of its debt agreements, it is "presently unable to incur additional indebtedness and this restriction will limit our flexibility in restructuring our existing indebtedness (including refinancing indebtedness coming due in 2008)" is unlikely to go down that well.

Centro NP is a subsidiary of Super LLC, a joint-venture holding company set up by Centro Properties Group and Centro Retail Trust in April 2007 to house New Plan Excel Realty Trust, which they bought for $US5 billion ($6.3 billion at the time). An unlisted Centro property syndicate, Direct Property Fund International, also has a minority ownership interest.

The SEC filing notes Centro NP's "ultimate parent investors are considering the option of obtaining third-party equity investment which may result in equity contributions into us to assist with our liquidity position".

It's all pretty nebulous and doesn't provide a lot of comfort for local investors or customers ahead of next week's 2008 profit reporting by the Centro duo, but it does set a scene for a wide-ranging restructuring to be proposed. The recent return of wobbly-knee syndrome among international banks couldn't have come at a worse time for Centro, which has already been through a couple of nail-biting debt extension negotiations with its various banking consortiums and has another coming up next month. It's understood Centro's Australian banks are meeting today, but whether it's just to review the 2008 accounts before they are approved by the boards for public release or if there's something else on the agenda isn't known.

If speculation in US property and financial circles turns out to have any validity, Centro may be about to get a proposal from a private equity-style consortium that essentially involves a trans-Pacific separation of the group.

The word is that a consortium, said to be anchored by Blackstone Group and possibly also involving some of Centro's larger US creditor counter-parties is considering bidding for Centro NP or Super LLC. Other names bandied about, all of which are thought to have kicked some or all of Centro's tyres earlier this year, include Brookfield Asset Management, Farallon Capital Management and Simon Property Group.

The flip side of the proposal envisages Centro Retail acquiring all of the group's Australian property interests, partly funded by proceeds from selling its US interests and partly through some sort of recapitalisation. It remains to be seen if local institutions, which have been pretty decently dusted by Centro already, would support such a proposal.

If it materialises, it will put the cross-hairs fairly and squarely on Paul Cooper, who succeeded the now-departed Brian Healey as chairman of both listed Centro's, even though it will be chief executive Glenn Rufrano fronting investors. Rufrano was conscripted to replace former CEO Andrew Scott in December, when Centro's debt bomb exploded. His calm and measured style contrasted with Scott's more abrasive one, and went a long way to reassuring creditors and investors.

Rufrano - who was running New Plan when Centro bought it and is said to be widely regarded in the US shopping-mall industry - could be placed in an uncomfortable position if he is also tagged to run a discretely owned US Centro. There is already said to be friction inside Centro as well as among various creditor groups about whether or not Centro's operations on one side of the Pacific are treated more favourably than the others. Cooper, already in an uncomfortable position of potential conflict as chairman of Centro Properties and Centro Retail, is likely to show little interest in the break-up scenario right now, given the still parlous state of group affairs and the heavy loss it would entail for investors. But the indebtedness of the Centro duo means the real power remains with its banks, not its board or its investors.


Ends.

Cheers, Pie :)