Taking Centro from the index comes as the group heads into its...

Taking Centro from the index comes as the group heads into its last week of negotiations with its financiers to extend its debt repayments for at least a year from December 15.

Centro has about $2.3 billion of debt that must be rolled over or paid by next Monday.

A further $US450 million ($A680 million) owed to private US-based noteholders will also fall due.

At Centro's annual shareholder meeting on November 28, chairman Paul Cooper warned that "in the event that the lending group does not extend the agreements, Centro would be in default of its debt covenants. The implications of this potential scenario include the possibility that Centro will be placed into administration or receivership."

However, bankers said that the rescue package offered to Babcock & Brown last week was likely to be replicated for Centro. That means while the banks effectively own the group, the current management will remain the custodian and keep the business afloat.

Bankers to the troubled retail landlord say that most of their exposure is to the main holding group, Centro Properties, which generates income through the management of syndicates and its listed associate, Centro Retail Trust (which remains in the ASX 200 index).

Thus if any Centro malls or syndicates are sold or shut down, Centro Properties loses its management fees and the banks lose any ability to get their money.

Some funds can be generated through asset sales, but in the current climate, sales are being made at least 20 to 30 per cent below book value.

Centro chief executive Glenn Rufrano has maintained that any asset sales are contingent on Centro remaining as manager, to generate the necessary fees to keep the business alive and the banks' interest bill covered.

SMH


Didn't bankers say only a few days ago that cnp wont get extension???