TP Note: Talk about scaremongering!!! This article states what was always known to the market. The 'accounting mistake' they refer to of some $1.5B debt was nothing new, it happened months ago! It was included in Centro's Total Liabilities in it's 2007 Audited accounts and was changed from being reported as a 'non-current liability' to a 'current liability'. Approximately the same time as Glenn Rufrano came on board this 'accounting mistake' was picked up, and was brought to light.
As for the SMH Business Journalist that spoke to Mike Carlton on 2UE this morning he certainly portrayed a dim view on Centro's announcement on Friday evening to be one of almost shock and horror re; the mention of the $1.5B debt; and When asked if he thought that the short-term debt could be re-paid within a 2 month time frame he said he quite frankly didn't think so!!! Make of that what you will. Bad reporting at its worst IMO! - Pie ___________________________________________________________
Source: www.smh.com.au/business
Centro's $1.5b debt headache Miriam Steffens February 18, 2008
CENTRO Properties Group has admitted its debt situation is more precarious than previously revealed, with current liabilities about $1.5 billion higher than stated in its accounts.
The embattled shopping centre owner disclosed the accounting mistake on Friday night when it confirmed it had won a last-minute reprieve from its lenders to refinance debt due that day. The board has suspended its 40.6-cents-a-share distribution forecast for the year until it finds a way out of the crisis.
The additional current debt comes on top of $1.1 billion disclosed when Centro corrected its preliminary 2007 accounts in September. While Centro's total debt remains unchanged, it means the company will have to renegotiate or repay close to three quarters of its $3.6 billion in liabilities within the next 12 months.
Centro has so far refinanced about $209 million of the additional $1.5 billion in short-term debt, and said it was "continuing its review of the circumstances surrounding the original classification" of its liabilities.
The latest announcement provides fresh ammunition to possible class action suits by disgruntled shareholders, who have seen the value of their investments decimated over the past two months.
Centro's shares have plummeted 89 per cent since the company in mid-December revealed it was caught out by the global debt market crunch, and was struggling to refinance $3.9 billion in short-term debt after its massive US expansion.
The stock is expected to start trading again today after a halt on Friday pending the outcome of negotiations with Centro's Australian and US lenders, including ANZ, Commonwealth Bank and JP Morgan. Talks dragged on until late Friday as one of its main lenders held out for better terms. The company ultimately secured an extension for about $US1.3 billion ($1.4 billion) in debt for its US business until September 30, plus $US80 million in additional funding. As flagged in the Herald last week, the Australian lenders have granted a two-month lifeline until April 30 for $2.3 billion in debt, including $1 billion which would be due in the next eight weeks.
Centro expects the Australian banks may also come around to extending their facilities through to September, but they have kept their options open to monitor the progress of its reorganisation. Bond holders in the US have agreed to hold off alongside the Australian banks.
Centro is looking to sell its interests in its unlisted Australian and US shopping centre funds or find a cornerstone investor for the whole company. Glenn Rufrano, who took charge last month, said the extension would give Centro "sufficient time" to work out its options. "The strategic review is progressing well, with a significant number of parties interested in pursuing a recapitalisation of the group," he said.
The company has shortlisted four bidders for its stake in the Australian wholesale fund, which owns $2.6 billion worth of centres. Centro will report first-half earnings on February 28.
Centro's listed spin-off, Centro Retail Trust, has also had to increase its current debt figure, saying $598 million of its $1.4 billion in debt would have to be reclassified as due in the next 12 months.
The trust has refinanced $508 million of that current debt since July 1. It has also provided a $US450 million guarantee for Centro's US bond holders. Like its parent, Centro Retail has suspended its dividend guidance for the year.
Ends.
Cheers, Pie :-)
CNP Price at posting:
0.0¢ Sentiment: None Disclosure: Held
