centros roller coaster ride...afr...

TP Note: Apologies for any typing errors; I have typed this directly from the AFR newspaper itself. - Pie
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Source: The Australian Financial Review - Friday 4 April 2008

Centro's roller-coaster ride
Matthew Dunckley and Paddy Manning

Centro Properties Group shares soared more than 70 per cent yesterday before going into a trading halt as investors weighed alternatives for the beleaguered retail investor, including a possible carve-out of its funds management business.

Centro is trying to reduce its debt, preferably by obtaining a cornerstone investor.

The Australian Financial Review reported yesterday that potential investors could value Centro at up to 90c a share.

Centro's price more than doubled yesterday from 29.5c to an intraday high of 65c, as more than 128 million shares changed hands.

The share price settled back to 50.5c, up 71.19 per cent, before trade was suspended after a price query notice from the Australian Stock Exchange.

The gains came despite a report in the AFR that said Centro's banks were disappointed by the offers it had received.

A source said that Centro's headstock was widely believed to be 'underwater'.

In reply to the ASX query, Centro said it was in discussions with a number of parties and lender groups.

"There is no certainty or assurance that these discussions will lead to a transaction," the company said.

None of the banks, or Centro, would comment further. Lazard Carnegie Wylie, which is advising Centro, was unavailable for comment.

Sources said one scenario under consideration was for Centro to retain the units it held in its myriad property ownership and investment funds and sell, or seek a joint venture partner, in its funds management business.

"Some people are looking at potentially investing in the services business versus the asset and ownership business," one source said.

Under this option it is believed Centro would essentially sell the fee stream it reaps as manager of its $24 billion asset base and instead become an investor.

"Somebody might want to become the shareholder in the funds management business or [propose] a part externalisation of the funds management business," the source said.

Another observer said that model was a possibility, although the value placed on the funds management business was hard to quantify and the impact on shareholders was also difficult to assess until the bid structure was known.

But another source said there was "no chance" that Centro's funds management business could be carved out of the headstock. A better outcome would be for existing Centro management to staple itself to the separately-listed Centro Retail Trust, which would be the only vehicle left in the market.

Centro Properties Group would be cast adrift, including any potential litigation liabilities, and its lenders would "take a haircut", under the scenario.


Ends.

Cheers, Pie :-)