Creditors Give Centro Time to Sell Assets
- Feb 15, 2008
According to a statement filed with the Australian Securities Exchange by Centro Properties Group, the company now has more time to deal with its roughly $3.5 billion debt problems. About a dozen Centro creditors, including major Australian banks and Bank of America, JP Morgan and Wachovia, agreed to the deal just ahead of the expiration of the previous extension, slated for today. Part of the debt, about $2 billion, has been extended until the end of April. Much of the rest, especially that associated with the company’s foray into the United States, has been extended to Sept. 30. The debt was mostly incurred when Centro bought U.S. retail assets in 2006 and 2007, especially New Plan Excel, a REIT that specialized in neighborhood and community centers. For the most part those acquisitions relied on short-term debt that was to be replaced later by borrowing from the U.S. CMBS market. When the CMBS market wilted in the face of the credit crunch last year, so did Centro’s prospects for refinancing. According to various published reports, a long list of entities has an interest in either buying Centro whole, or taking pieces of the company. By square footage, the majority of Centro’s assets are in the United States, mostly community and neighborhood centers. In Australia, the company has a portfolio that includes some major regional malls. Glenn Rufrano, who became CEO of Centro in January, noted in the statement sent to the exchange that “the Group appreciates the cooperation of its lenders which will allow sufficient time to complete the review of recapitalisation options. The strategic review is progressing well with a significant number of parties interested in pursuing a recapitalisation of the Group.” Centro’s stock plummeted nearly 90 percent in December on word of its debt problems, to less than A$1 per share. At the close of the markets in Australia today, it stood at 61 cents.The firm could not be reached for comment today.