the one and only mr colman

http://business.smh.com.au/business/poker-ace-offers-helping-hand-to-shuffling-centro-20090125-7phh.html

Poker ace offers helping hand to shuffling Centro
Mark Hawthorne
January 26, 2009

FOR thousands of investors in Centro Property Group, news that the company's best chance of salvation may sit at a poker table is far from heartening.

But with a share price that has slumped from $2.07 at its peak to just 6.7c at its last trade, any hope of salvation is good news.

Over the past 15 months the owner of the country's second-biggest retail property portfolio had the near-impossible task of refinancing almost $4 billion of debt in the midst of the global credit squeeze.

Directors have since left, and lawyers have begun class actions against the company for allegedly misleading investors.

Even the long-awaited debt refinancing plan agreed to this month has done little to lift the share price, due to the dilutionary effect of the deal on the company's register. If hybrid securities are converted, banks could emerge with a 90 per cent stake in Centro by 2016.

As Centro collapsed like a house of cards, one interested observer watched while dealing with cards of his own - the world-ranked poker player Julius Colman, who sold the property syndication business MCS Property to Centro for $193.5 million in 2003.

The purchase was meant to be a company-maker for Centro. MCS, which grew from the small suburban legal firm of McGrath Colman Stewart in 1975, was Australia's biggest property syndicator. Thousands of investors in syndicates put together by MCS controlled $1.4 billion worth of assets.

Picking up that portfolio of mid-sized shopping centres propelled Centro to the big end of the property sector, making it the biggest manager of shopping centres in the country, and second only to Westfield in terms of the retail space managed.

The sale provided cornerstone investors in MCS, including the Myer family and Mike Fitzpatrick's Hastings Funds Management, with a windfall. Mr Colman retired before turning 60 to pursue his love of poker.

MCS investors enjoyed an after-tax yearly return of 19 per cent for more than a decade until Centro bought it. Until its recent woes, Centro MCS was returning more than 17 per cent.

But the complex MCS syndication business also added to the incomprehensible structure of Centro and its subsidiaries, all of which ultimately obscured a big hole of debt. In August Mr Colman put together a consortium - along with the Myer family and Mr Fitzpatrick - to try to buy back Centro MCS.

"We mistakenly made a financial offer last year [and] have since decided it was ill-advised," he said. "It came about because I felt a responsibility to investors in the syndicates we had put together, but Centro had more important things on the agenda, like getting the refinancing done, before it worried about asset sales."

Mr Colman has now dropped the idea of buying back the company he helped create, but that has not stopped him from approaching the board and offering his services to try and turn the company around.

Glenn Rufrano, the New Yorker who has brokered the deal with banks, has signalled his departure, saying he wants to return to the US.

That has left Centro management in limbo. Mr Colman said: "I have made an offer to help Centro's management find a way out of its problems, but I don't want to say any more now because the debt has only just been rolled over. But if they start looking for someone who knows the business, then I am around."