DEBT-LADEN Centro Properties Group has won a seven-day reprieve from its bankers, with $2.3 billion in Australian debt due to be refinanced by midnight yesterday extended to next week.
Centro's US noteholders, owed $500 million, have agreed to a September 30 refinancing deadline provided its Australian banks, owed $2.3 billion, also roll over the debt, according to a company spokesman. Centro has a week to finalise the agreement with the Australian banks.
Yesterday was a critical date for Australia's second biggest shopping centre owner, which needed to secure its third debt extension or face collapse.
Centro has another $2.5 billion of US bank debt that must be refinanced by September 30.
The interim extension was to "allow time for the finalisation of discussions with all financiers and the completion of documentation for a longer-term extension", Centro said.
Last month Centro chief executive Glenn Rufrano said: "If there was a default on April 30, it all falls due", referring to the September dated debt as well.
Centro has faced collapse since December, when it was unable to refinance $3.9 billion worth of maturing debt in the risk-averse credit markets, sending its share price into freefall.
The group has been running a three-pronged strategy to reduce its total debt of $17.5 billion (of which $8 billion matures before December 31). It hopes to find a new investor for the head stock, Centro Properties, sell off Centro's $2.3 billion (book value) share of Centro Australia Wholesale Fund, and/or sell the Centro America Fund with $US800 million ($860 million) of assets.
Last month Mr Rufrano said centres from the Australian wholesale fund would be sold piecemeal rather than as a whole portfolio. But potential bidders said yesterday that the centres offered for sale had changed.
At least three centres -- Galleria and Mandurah in Western Australia, with book values of $585 million and $233.7 million respectively at June 30, and the $413.8 million Glen shopping centre in Melbourne -- were no longer for sale, a source said.
Across the portfolio, Centro was also holding out for yields no more than one-quarter to half a per cent below book value, which would take the average capitalisation rate to 6.25-6.5 per cent, the executive said.
But the market was offering closer to 7 per cent, he said.
"Its been a debacle -- we are not going to waste time and effort if they are not serious."
Potential purchasers have estimated that full legal and physical due diligence for the 25 centres in the Australian Wholesale Fund could cost up to $2 million.
Jones Lang LaSalle agents Simon Rooney and John Talbot are understood to be on a European, Asian and Middle Eastern roadshow to find buyers for Australian properties including the Centro assets properties.
Among local parties reported to have shown interest in the wholesale fund are ISPT, Colonial First State and Stockland.
Centro closed yesterday at 45.5c, down 2c.
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