smh centro confident debt deal is done

Centro confident debt deal is done

Carolyn Cummins
May 2, 2008

CENTRO Properties Group has vowed to restore investor confidence, saying its directors are certain they can negotiate its debt refinancing program until at least September 30.

The directors, led by the chief executive, Glenn Rufrano, also confirmed the retail property owner had successfully refinanced the debt for eight of its MCS Syndicate businesses, totalling $330 million, for two years ending in 2010. The eight vehicles have a combined asset value of $1.1 billion and hold a variety of assets from inner-city shopping centres to properties in regional and country areas.

But the news failed to inspire investors, and the price fell 1c to 44.5c on average volume. The decline came a day after Centro said it had been given a week's reprieve to repay its mountainous $4.2 billion debt that had been due on Tuesday.

In a statement yesterday, Centro directors advised that "in the company's view, the negotiation of all material terms for the further extensions has been substantively concluded (subject to final documentation) with all of its financiers except one which is owed less than $200 million".

"All of the other relevant financiers, comprising Australian lenders, US private placement noteholders and US lenders, have indicated their support for the longer-term extension and continue to work constructively to finalise these arrangements as quickly as possible by 7 May, 2008."

Speculation centred on the German bank WestLB as the one dissenter to the agreement. But news emerged yesterday that the European Union had approved a $US7.8 billion ($8.3 billion) bailout for WestLB after its net loss of €1.6 billion ($2.66 billion) last year, significantly higher than predicted, because of the subprime crisis.

Merrill Lynch said yesterday that it still saw two likely outcomes for Centro. "One, fund and assets sales to pay down the debt and strengthen the balance sheet, and two, an equity infusion from a third party."

The funds manager Pelorus Property, which had declared its interest in Centro's syndicates, was yesterday suspended from trading for failing to submit its 2007 annual report.