MELBOURNE (Dow Jones)--Centro Properties Group (CNP.AU), the Australian shopping mall owner facing a midnight deadline on refinancing A$2.8 billion in debt, will make an announcement before the market opens Thursday, a company spokesman said Wednesday.
Earlier Centro halted trade in its stock and in Centro Retail (CER.AU), a property trust it manages, pending the announcement.
Last week the company, which had A$6.6 billion in mature debt, was granted a seven-day extension to renegotiate debt and avoid bankruptcy. U.S. and European banks in February gave Centro until Sept. 30 to refinance loans on the condition that other lenders granted a similar extension.
"We wait with baited breath on news," said Credit Suisse in a client note, adding the company was "too big to fail."
"If it were to collapse, and its A$9.5 billion empire were liquidated, the impact on Australian property values would be dramatically negative" and the banks' collateral would also be diminished.
Centro, which has a portfolio of 803 malls in the U.S., Australia and New Zealand worth A$24.9 billion, incurred the debt through a A$10 billion spending spree on U.S. assets in the past two years, and has been struggling to refinance after the credit crunch increased borrowing costs.
The company said last week it was close to finalizing terms for an extension until at least Sept. 30 on facilities that matured April 30 with all of its financiers except one owed less than A$200 million.
All of its lenders, including an Australian banking syndicate owed A$2.3 billion and U.S. noteholders who loaned US$450 million, have indicated support for the longer-term extension, Centro said.
Its lenders include Australia and New Zealand Banking Group Ltd., National Australia Bank Ltd., Commonwealth Bank of Australia Ltd., Royal Bank of Scotland, BNP Paribas, Japan's Sumitomo Mitsui Banking Corp. and Germany's WestLB.
The Wall Street Journal reported Wednesday, citing people familiar to the situation, the banks have agreed to extend the deadline to Dec. 15.
However, West LB, which holds less than US$200 million of Centro's debt and had just received a US$7.8 billion bailout from the European Union and wanted more time to consider the deal, the newspaper said.
"If WestLB elects to bolt from the extension, it could mean that Centro or the other banks will have to pay its claims or that Centro will end up in the Australian equivalent of bankruptcy court," the newspaper said.
Centro had A$4.2 billion in debt that matured April 30, while Centro Retail Trust, a property trust managed by the Melbourne-based company, had A$1.2 billion, and associated funds - Centro Australian Wholesale Fund and Centro MCS - had an additional A$1.2 billion, it said.
The company, which had debt of A$17.5 billion at Dec. 31, has lost more than A$4 billion of its market capitalization since Dec. 17 when the company informed the market about its shortfall on A$2.9 billion, which was later revised to A$3.9 billion and since escalated.
Centro Properties stock last traded Tuesday at 47 cents, while Centro Retail shares were last exchanged at 48 cents each.
The company is seeking buyers for two of its unlisted funds, Centro Australia Wholesale Fund and Centro America Fund, which have assets of A$3.7 billion.
Centro is being advised by Lazard Carnegie Wylie, which is handling the sale of its Australian Wholesale Fund, while its U.S. parent is negotiating the sale of Centro's America Fund.
-By Andrew Harrison, Dow Jones Newswires; 61-3-9671-4323; [email protected]
(END) Dow Jones Newswires
May 07, 2008 02:28 ET (06:28 GMT)
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