http://www.news.com.au/heraldsun/story/0,21985,24805491-664,00.ht...

http://www.news.com.au/heraldsun/story/0,21985,24805491-664,00.html


CENTRO executives were locked in meetings with bankers yesterday as the deadline for $3 billion in debt to be refinanced passed without agreement.

The company's bankers had been expected to agree to a proposal from Centro chief executive Glenn Rufrano that would see debt swapped for equity.

But disagreement between the banks over the deal forced Centro to call a trading halt yesterday.

If the company cannot reach an agreement with its bankers it will be forced to call in administrators.

Market sources said the Commonwealth Bank, which has a strong secured position, is holding out for a better deal on $160 million it is owed.

An additional $US450 million ($A674.71 million) owed to US noteholders also fell due yesterday.

The big Australian banks exposed to Centro were tight-lipped yesterday, with CBA, NAB and ANZ declining to comment.

Centro asked for trade in its stock to be halted in a statement to the stock exchange issued before the market opened yesterday morning.

It asked for a halt until this morning or "until the making of a pending announcement regarding the outcome of negotiations on the extension of its finance facilities that are due to expire today".

Billions of dollars in real estate could be tipped onto the market if no agreement is reached and Centro is put into administration. Centro controls more than 700 shopping centres in Australia and the US through a complex network of direct and indirect ownership and managed funds.

The company has already had three extensions on debt this year, with the deadline for payment moved first to April, then to September, and finally, to yesterday.

Unable to find money in the global financial crisis, Centro floated the debt-for-equity plan in late August.

Such a swap would likely heavily dilute the value of existing shareholdings - already decimated by the company's long-running debt crisis.

A deal had been regarded as likely because the shopping centres that Centro manages and draws income from continue to be profitable, despite the economic downturn.

If the crisis, which started a year ago on December 13, 2007, continues into a second year Centro would also face the prospect of some of its additional $10.6 billion in long-term debt falling due.

Before yesterday's trading halt Centro scrip traded at 8.7c.