http://www.news.com.au/business/story/0,23636,23767096-31037,00.h...

http://www.news.com.au/business/story/0,23636,23767096-31037,00.html

CENTRO Properties Group is facing claims worth $700 million or more by disgruntled shareholders who say the troubled fund failed to disclose the full extent of its debts.

The property giant is facing Federal Court action on two fronts with law firms Maurice Blackburn and Slater & Gordon running class actions against its listed arms, Centro Properties Group and Centro Retail Trust.

The claim value of the Maurice Blackburn action has soared to $700 million since the first estimates of around $100 million last month.

Centro's shares tumbled 80 per cent last December after it announced it was struggling to refinance the debt on its 800-strong property portfolio spanning Australia, New Zealand and the US.

"We think whatever happens it's likely that our case represents the bulk of the victims,'' Maurice Blackburn's principal lawyer Andrew Watson said outside the Federal Court today.

"Centro, we contend, engaged in a breach of its continuous disclosure obligations (and) misleading and deceptive conduct in a period running from August (2007) through to February (this year).

"Those contraventions caused loss to shareholders.


"The quantum of that loss on price-paid-less-price-received basis is approximately $700 million across both actions.''

Maurice Blackburn's lead plaintiff is Richard Kirby, described by Mr Watson as a retail investor, but the action also includes major institutional investors.

"Think of a major financial institution and they're probably in this case,'' Mr Watson said.

The Maurice Blackburn action is an "opt-in'' claim joined by shareholders who are backed by listed litigation funder IMF Australia Ltd.

In contrast, the Slater & Gordon case is a more traditional class action which effectively covers all shareholders not signed by IMF Australia, unless they opt out.

"That's thousands of investors,'' principal lawyer James Higgins said.

Citing legal reasons, Mr Higgins declined to name a ballpark figure for the claim value of Slater & Gordon's class action.

"The pleading as it currently stands means that our case represents the vast bulk of losses of investors in Centro,'' he said.

Slater & Gordon's action will claim Centro deliberately misclassified its debt position, failed to inform the market and failed to adhere to accounting standards.

Those breaches, according to Slater & Gordon, occurred between April last year and February this year.

Market experts will give evidence to the court on how much Centro's share price was effectively inflated by its alleged failure to disclose its debt situation.

"People purchased a share at a certain price,'' Mr Higgins said.

"Had they know what was actually going on that price would have been a different price.

"It's the extent to which there's an inflation in the price, that's what the individual's entitled to recover.''

Centro yesterday issued a statement saying it would "vigorously defend'' the claim in the interests of its security holders. Earlier this month Centro was thrown another lifeline by its lenders with $2.8 billion in debt extended to December 15.

Centro Properties and Centro Retail Trust have two other obligations of $US1.1 billion each relating to a US joint venture, which had their deadline also be pushed back to the December 15.

The reprieve is also tied to a number of conditions being met by Friday this week.

Those conditions include a series of agreements being finalised among Centro's bankers while the property fund itself must have in place a $155 million "liquidity facility''.

Centro's bail-out plan also relies on reducing debt through asset sales from its Australian and American shopping centre portfolios.

Centro Properties shares were up 2.5 cents, or 7.25 per cent, to 37 cents at 3.30pm AEST.

Centro Retail shares were up one cent, or 2.86 per cent, to 36 cents.

After a brief directions hearing today, Justice Ray Finkelstein ordered the case return to court on July 25.