Carolyn Cummins Commercial Property Editor May 31, 2008...

Carolyn Cummins Commercial Property Editor
May 31, 2008

INVESTORS in shopping centre owner Centro Properties are expected to be told the group's banks have awarded an extension of its debt restructuring program when the stock comes out of its trading halt on Monday.

After a week of heated discussions among all the international and Australian bankers and bond holders to the retail landlord, it was believed that an agreement was reached late on Friday to give Centro more time to repay the outstanding $4.9 billion-plus borrowings.

Centro had until the close of business yesterday to reach a deal with the banks and meet conditions for an extension of $2.8 billion in debt to December 15.

Part of the conditions to roll over the debt was that Centro bed down a $155 million liquidity facility and satisfy the financiers that sales of assets to repay the loans were sufficiently well advanced.

Directors of Centro and its associate Centro Retail Trust requested a trading halt before the market opened yesterday and issued a statement later in the afternoon that an update is "expected to be made prior to opening of trade on Monday 2 June 2008".

Before the trading halt was issued at 9.15am yesterday, Centro was at 38c, while Centro Retail Trust was at 36c.

Thanks to aggressive day trading that has dominated both stocks for months, there were bids posted for Centro at 46.5c and for Centro Retail Trust at 50c.

Assuming the debt was rolled over, the traders are speculating the prices will move up strongly when trading resumes on Monday.

On May 9 Centro's chief executive, Glenn Rufrano, said he was confident that after the banks reached their own lending agreement by yesterday, the deadline for the major tranche of the total $6.5 billion of borrowings would be December 15.

The United States bankers and bond holders, who flew in to Melbourne this week and were spotted at the Federal Court in Melbourne on Tuesday for the directions hearing for two class actions, have a September 30 deadline.

If the lenders are satisfied that Mr Rufrano can raise the necessary cash then that deadline is also expected to be extended to mid-December.

Centro's main local bankers are ANZ, Commonwealth, National Australia and St George banks. It also has US bank creditors including JPMorgan and Bank of America.

Since Centro's revelation in late December that it was unable to meet its debt obligations, its market value has dropped from about $6.8 billion to last week's $321.14 million.

It was March 1 last year when Centro agreed to buy New Plan Excel Realty Trust for $US3.7 billion in cash to become the fifth-biggest mall owner in the US.

Including debt, the $US6.2 billion deal was the biggest US acquisition by an Australia-based real estate investment trust.