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http://business.smh.com.au/reprieve-in-centro-battle-to-shed-debt/20080212-1rtg.html

CRIPPLED property group Centro has been given an additional two-month lifeline by its bankers to help it avoid a fire sale of its valuable Australian retailing assets.

Facing a deadline this Friday to put a new re-financing plan in place to reduce its $3.9 billion in debt, Centro will now have until the middle of April to carry out an orderly auction of key parts of its shopping centre portfolio.

Details of the package, said to have been agreed in-principle with its main bankers including ANZ, Commonwealth and National Australia Bank, which are owed $500 million between them, are due to be announced formally on Friday morning.

The deal will take some heat off Centro after its attempts to reduce the cost of servicing its huge debts last month got caught up in the global liquidity crisis.

The crisis resulted in wider shareholder concerns about the complexity of Centro's corporate structure and how much the group was exposed to the finances of various property trusts that had been spun-off from the Australian and US retail centre operator.

Those concerns cost the job of Centro founder and chief executive Andrew Scott, who was forced to resign after a dramatic collapse in both the company's share price and investor confidence in his management.

Mr Scott was replaced four weeks ago by US property executive Glenn Rufrano, who had headed New Plan Excel Realty, which was acquired last May by Centro for $6 billion.

Well known to the American banking and financial community whose concerns about Centro's debt exposure caused lenders to start calling in their loans,

Mr Rufrano has spent the past four weeks negotiating with the group's principal backers to relieve the immediate pressure to sell assets.

Centro, Australia's second-largest shopping centre owner, which also runs 700 centres in the US, is said to have received several indicative offers from major property and investment groups since it opened a data room to handle the sales earlier this month.

Despite its problems, Centro is continuing to receive a highly profitable stream of rental income from its malls which, by and large, are fully occupied and located in major regional cities and towns across NSW, Victoria, Queensland, South Australia and Western Australia.

The aim of the financing lifeline is to give Mr Rufrano more time to extract better offers for the group's assets and to unwind certain joint venture arrangements concerning the ownership and management of dozens of regional shopping malls, most of which are located in the US.

He is also having to untangle the complex links between the main parent company, Centro Properties Group, and its unlisted real estate funds and syndicates.

Centro's shares edged up a cent yesterday to 62 cents following January's price collapse. The debt crisis of the last four weeks has wiped more than $4 billion from the company's market capitalisation. Yesterday it was worth just $516 million.

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