Centro Properties Group says it has opted not to pay the June 30 coupon due on its $US500 million ($A523 million) of exchangeable notes.
The notes have a coupon of 5.5% payable half yearly on June 30 and December 31.
Centro said it had two options - to pay the June coupon in cash, or elect not to make the payment.
"In the past, Centro has elected to take Option 1,'' company secretary Elizabeth Hourigan said in a statement to the stock exchange.
"However, Centro advises that, to conserve liquidity and against a background of Centro declaring a nil distribution to ordinary securityholders on 19 June 2008 for the six months to 30 June 2008, it has today resolved to take Option 2 for the 30 June 2008 coupon.''
The decision will trigger a "capital and distribution stopper''.
It means Centro will be prohibited from making any distributions to ordinary stapled securityholders until the missed 3.5% per annum payment of $US8.75 million has been paid.
"The non-payment of the cash component of the coupon is not an event of default under the exchangeable notes, any of Centro's financing facilities or those of Centro Retail Trust or any of Centros managed funds,'' Ms Hourigan said.
Of the 5.5 % per annum total coupon rate, 2% per annum accrues and is added to the principal amount of the exchangeable notes.
Centro's decision today affects the remaining 3.5% per annum.
Shares rose 15%, or 3.5 cents, at 27 cents.
CNP Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
