Centro Properties Group has been granted a seven-month reprieve until December 15 to repay $5.7 billion in debt, The Wall Street Journal has reported in its online edition.
The troubled owner of close to 700 US shopping malls, currently in a trading halt, is close to securing its fourth repayment extension from German lender WestLB, which holds $200 million of Centro debt, sources told the paper.
The reprieve would give Centro more breathing space to proceed with its program of asset sales, in order to placate its US and domestic lenders and avoid being placed in receivership.
Under the terms of the deal, WestLB will revisit its decision later this month or early next month after Centro provides more data on its operations, the Journal said.
If WestLB is unhappy with what it sees, it can revoke the extension and Centro would be liable to immediately pay down the debt.
WestLB is believed to be the “local” lender that was holding out on approving Centro’s request for a five-month extension to refinance its domestic debt.
Centro is expected to annouce a 48 hour extension on its debt refinancing deadline as its lenders finalise a more lengthy extension, The Australian Financial Review reports.
7-day extension
Last week, Centro was granted a seven-day extension to finalise a longer-term extension on $2.3 billion in debt owed to its domestic lenders, that was due to expire today.
WestLB was believed to have been resisting the extension as it deals with its own debt issues that have already resulted in the German government pumping $8.2 billion into the company to prop it up.
The extension also effectively covers another $US450 million ($473.98 million) in US private placement notes whose holders have agreed to act in line with Australian extension arrangements.
Complicating the picture are two other debt obligations of $US1.3 billion ($1.39 billion) and $US1.2 billion ($1.29 billion) owed by Centro and Centro Retail Trust for their US joint venture.
Those debts already had been refinanced to September 30 but the extensions also were contingent on Centro's $2.3 billion debt due on April 30 being refinanced.
Shares in trading halt
Earlier, Centro Properties Group Ltd and Centro Retail Group Ltd were placed in trading halts pending the release of an announcement, believed to be the WestLB extension.
Securities in both companies will not be traded until either normal trading begins on May 9, or an announcement is made.
Centro Properties Group shares last traded at 47 cents, while Centro Retail Group shares enter into the halt at 48 cents.
With around $25 billion in assets under management, Centro is Australia's second largest shopping centre owner.
Centro's troubles began after it borrowed heavily to pay for acquisitions to spearhead expansion, especially in the United States.
It was caught out by the global credit crunch and struggled with the leverage on its 800-centre property portfolio, spanning Australia, New Zealand and the US.
Last December, Centro and its stable of companies admitted their difficulty in refinancing short-term maturing debt.
Centro is trying to pay down its debt by selling some of its portfolio, including one of its Australian wholesale funds that holds 28 properties
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