odds of survival, page-35

Announcement - sounds positive but????

THE Commonwealth Bank, a key financier of crippled Centro Properties Group, yesterday moved to introduce a "stabilisation plan".

It is likely to result in the Australian banking syndicate rolling over the group's hefty debt, say industry sources.

The Australian understands that support was given to keep the company afloat at a meeting yesterday between CBA and Centro chief executive Glenn Rufrano and chairman Paul Cooper.

The future of Centro -- which is teetering on the edge of collapse -- will be known before or on December 15, the date it must refinance three corporate loan facilities worth more than $4.95 billion with US and Australian bankers.

A spokesman for Centro declined to comment.

Commentators speculated a stabilisation plan could include a partial carve-up of the group. So far, Centro has only managed limited asset sales.

Centro has also been trying to persuade the Australian banks to convert some of the debt into a hybrid security, which would later switch to equity, and is asking the US lending group for a debt extension.

The Australian banking syndicate includes CBA, National Australia Bank and ANZ.

According to investment bank UBS, CBA's unsecured exposure to Centro is $200million, ANZ's is $680 million and NAB's is $200 million. CBA holds the biggest secured position at $1.04 billion, followed by NAB at $750 million.

Despite CBA's support, uncertainty still remains about the positions of ANZ and NAB.

A media report last week said the collapse in the Australian dollar had significantly increased the US dollar-based Centro liabilities faced by ANZ and NAB.

A spokesman for CBA declined to comment.

One market source yesterday said he believed everyone was "aiming for" another extension beyond the December 15 deadline, possibly "for three months".

"I would be surprised if it fell over at this time," he said.

On Tuesday, Goldman Sachs JBWere told clients a break-up was "the only likely viable outcome, and our bearish view on real estate asset values does not bode well."

Goldman concluded by saying: "Through each of the short-term debt extensions Centro has announced in 2008, none has generated any price support for the stock,

"We now believe that, even if a long-term debt extension were secured, the damage to the brand of the core business over the past 12 months is irreparable and the ability for either REIT (real estate investment trust) to be a healthy going concern is highly debatable."

Shares in Centro Properties were steady at 7c yesterday.