centro chief confident of debt deal

THE Centro Properties's chief executive, Glenn Rufrano, is confident he can win over his bankers in the coming week and extend his beleaguered company's debt repayment deadline for another six months.

Otherwise his stay here will be shortlived. And given that he has a 12-month contract and "thoroughly" enjoys living in Melbourne, he is not yet prepared to wave the white flag.

"We hope to reach an agreement with our bankers," Mr Rufrano said yesterday. And with an ambition that will make investors very happy, he added that "we plan to simplify Centro's very complicated structure".

By April 30 Centro must repay the first tranche of its $4.2 billion debt to its Australian financiers. If it doesn't it will trigger a default of the rest of the cash owed to its American bondholders and bankers. But that wouldn't be an issue because if Centro fails to meet the first hurdle, the receivers move in and the company goes under.

That is not a scenario Mr Rufrano is contemplating.

Speaking in Sydney yesterday as part of a series of meetings with his key investors, Mr Rufrano said he was confident of negotiating a suitable arrangement with the financiers.

But, hopefully, he said, on his terms, through his proposed recapitalisation plan. By the end of the month Mr Rufrano and his advisers, Lazard Carnegie Wylie, will move on to the next phase of selling either all or part of the vast portfolio of 700-plus shopping centres it owns here and in the US.

However, Mr Rufrano and his management team are also conscious of maintaining staffing levels and would prefer to keep management of the centres.

The New York-born executive said while a "fire sale" was not a common term in the US he knew what it meant and was not keen to use it when talking about Centro.

Mr Rufrano confirmed to the Herald that his plan to recapitalise Centro remained a three-pronged strategy: raising equity through the sale of the whole business, selling Centro's stakes in its Australian and US wholesale funds, or the sale of individual assets or a smaller portfolio of malls.

He also suggested that the group could sell its services business, comprising its funds management and syndicate arms, separately to its shopping centre assets.

Since he took over in January when Centro's former management revealed the group was defaulting on its debt, Mr Rufrano had said he did not want to sell individual assets. But that view has now changed.

"As it stands today, we do not have an agreement with the banks to extend the debt repayment beyond April 30. But we are working with them. The banks have been very fair and reasonable to us and we have been very fair and reasonable to them," he said.

"But, to make it clear, we are not being forced by the banking groups [in Australia and the US] to have to take offers that are not beneficial to our shareholders and debt holders."

Although he declined to name any specific offers that have been made, Mr Rufrano confirmed that unlisted buyers - that is, not a listed trust, had shown the most interest in buying a smaller collection of assets, if not the whole company.

"Debt is difficult, but equity is plentiful - it's just priced very high," he said.

But Mr Rufrano said while the debt was crippling, the operations were very healthy. In the three months to the end of March, Centro had an occupancy rate of 99.5 per cent while its moving annual turnover growth at Centro-managed centres was 7.1 per cent with sales of $10.5 billion.