sir rod rescues centro...

Source: www.theaustralian.news.com.au [Breaking News]

Sir Rod rescues Centro
John Durie | May 08, 2008

CENTRO Properties Group has won support from its banks for a seven-month extension on its debt maturities.

Last-minute intervention from JP Morgan Australia chair Sir Rod Eddington convinced wavering Commonwealth Bank to back the deal, and German bank West LB also agreed to the extension.

Centro is expected to release a statement to the ASX this afternoon confirming the good news.

This gives the company more time to restructure itself and to sell property to meet its debt obligations.

While some have focussed on WestLB and its $186 million exposure, it was actually the Commonwealth Bank which proved to be the most intransigent, as the deadline which threatened to put the group into insolvency loomed last night.

CBA demanded more security before agreeing to the extension, and substantial changes to the documentation, which was eventually, and partially, agreed to.

This followed late night talks between Sir Rod and CBA boss Ralph Norris.

CBA has a $1.1 billion exposure, of which just $160 million is unsecured, while JP Morgan has the biggest exposure of all banks, totalling some $2.05 billion.

JP Morgan was also closely aligned to Centro’s former boss, Andrew Scott, and had played a key role in the expansion of the company.

Most of the banks have security against property that is performing to plan, but the trouble has been the structure of the company - so complex that no one really knew who had security over which asset.

Centro’s argument with the bank has always been that any decision to put the company under would destroy significant value, including the roughly $240 million in funds management earnings.

This worked to a point, and the banks have agreed to a new December 15 deadline.

This will be the last extension, unless some progress can be made on the restructuring.

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Ends.

Cheers, Pie :-)