centros new blood

The Spectators

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Gottliebsen: Centro's new blood

As the certainty of US recession becomes more widely appreciated, those companies with mountains of assets for sale are not going to find it easy, and good news is hard to come by. In Australia, one of the early casualties was the Centro group and it faces a long hard road back.

That’s why it was really encouraging to see that the former chief executive of Deloitte's Australian practice, Rob Wylie, has agreed to join the Centro Properties board.

Wylie is a good operator and he will bring a stream of new thinking to Centro. When a person of his calibre agrees to come onto a tough board, it gives confidence to the banks which, in the case of Centro, have some difficult decisions to make as they head to the new deadline of December 15. In essence, the Centro banks must convert part of their Centro debt to a hybrid equity security in a way that leaves value on the table for Centro shareholders and enables the company to have a secure operating future. The outgoing Centro directors Peter Wilkinson and Sam Kavourakis have hung in there, but given the nature of the reconstruction it's important to have new faces.

Given Australia’s insolvency laws, there is an element of personal danger in joining boards of companies that have their back to the wall. It is therefore a great tribute to the depth of Australia’s boardroom talent that quality people are prepared to take on these challenges. The best of example of this is the work being undertaken by the directors of Allco (Allco’s courageous four, September 5).

Significantly, Rob Wylie did not join the board of Centro Retail. In the planned reconstruction, the Centro Properties and Centro Retail groups are gong to separate. Centro Retail announced that it has appointed Avin Lieberman, who was a co-founder of one of South Africa’s largest real estate investment groups, Zenprop. He clearly can see potential in Centro Retail’s shopping centre exposure.

No retail property owner wins in tough times, but the sort of centres owned by Centro are likely to perform better that the up market malls, particularly in the US.