At least five suitors have submitted preliminary bids to purchase the entirety of Centro Properties Group, but the cash-strapped retail-property concern isn't resigned to selling itself at a fire-sale price, according to people familiar with the situation.
Among those that have submitted bids is Citadel Investment Group, the Chicago-based investment concern, these people say. A Citadel representative declined to comment. The identity of other bidders and the value of the bids, which are not final, were not known.
If Centro turns down the buyout offers, raising cash by adding joint-venture partners could be an option, people familiar with the matter say. The company faces an April 30 deadline from lenders to come up with a plan to raise capital and pay off at least a portion of $3.4 billion in short-term loans.
A Centro spokesman declined to comment on the status of Centro's efforts to raise capital by selling assets, saying the process "has had strong interest from both local and international participants."
The Australian Financial Review has reported the bids.
Melbourne-based Centro, a casualty of the U.S. credit crunch in commercial real estate, expanded in the past decade to become one of the world's largest retail landlords, owning 128 shopping centers in Australia and New Zealand and 682 in the U.S. Its shares, which traded as high as 10 Australian dollars ($9.10) last year on the Australian Securities Exchange, have languished below A$1 since it ran into a liquidity crunch in December.
A small, sleepy company as recently as 10 years ago, Centro fueled its growth through heavy reliance on debt financing for acquisitions and by recruiting outside investors into investment funds that own the majority share of properties it acquires. Centro has retained a minority stake in the properties and charges the funds fees to manage, lease and develop them.
In December, Centro said it could not refinance $3.4 billion in short-term debt it incurred to buy U.S. retail real-estate investment trust New Plan Excel Realty Trust earlier in the year. Centro failed to attract new investors into its investment funds quickly enough to buy most of the New Plan assets from it, leaving it stuck with the bridge loan from the deal.
Centro has assets of roughly $24 billion and debt of roughly $17 billion. Since 2005, it bought U.S. REITs Kramont Real Estate Trust and Heritage Property Investment Trust Inc. in addition to New Plan. This year, the board replaced Andrew Scott as chief executive officer with former New Plan CEO Glenn Rufrano.
(END) Dow Jones Newswires
April 02, 2008 22:15 ET (02:15 GMT)
Copyright (c) 2008 Dow Jones & Company, Inc.
CNP Price at posting:
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