This article is from the Australian Property Journal archive
THE noose around the neck of Centro Properties Group has tightened even more with it admitting it is unlikely to secure equity investment by a December deadline. The group now needs yet another debt extension from its bankers.
The news of Centro’s worsening debt crisis came as two class actions against the group were heard in the Federal Court yesterday. The separate class actions brought by Maurice Blackburn and Slater & Gordon are fighting for creditor superiority.
One analyst yesterday described Centro as being on “life support”, whilst another said it was now only a matter of time before administrators “took control of the business”.
Centro said yesterday it could give no assurance that it would be able to win further debt extensions.
In a statement to the Australian Stock Exchange yesterday Centro said: “The group believes that, in particular given the current difficult capital market conditions, an acceptable proposal capable of being implemented by December 15 is unlikely to be forthcoming.”
Centro, which owns about 670 United States shopping malls, continues to pursue asset sales and a recapitalisation that will assist in paying some $A5.3 billion ($US4.6 billion) in debt.
Centro’s current agreements with US bankers expires at the end of September whilst it has until December 15 to come to terms with Australian bankers including ANZ, Commonwealth Bank, National Australia Bank and St George Bank. US creditors include JP Morgan and the Bank of America.
In yesterday’s statement it revealed none of the proposals it had received so far for new equity provided an acceptable outcome for stakeholders.
Centro admitted it needed longer-term debt extensions are now required to pursue a recapitalisation over a longer time frame.
Last week, Centro said there was a possibility the company may longer be able to trade as a going concern due to its lack of short term credit facilities.
One analyst told Australian Property Journal there was thought in the marketplace that Centro was “trading insolvent”.
US based group Blackstone is rumoured to be seeking to take control of the paralysed Australian retail property group.
“It is more likely now that Centro is finished and predators will swoop and divide up the pieces. This is more than likely to happen prior to any court action against the existing entity,” one US analyst told Australian Property Journal yesterday.
Centro has been in discussions with bankers in Australia and the US in the past week, but “their position is being weakened by the day”, the analyst added.
“They have $1 billion worth of Australian assets on the market at the moment, but it is literally turning into a fire sale. The banks will move soon.”
Meanwhile, preliminary hearings for Maurice Blackburn’s “closed” claim and Slater & Gordon’s “open class” claim were heard in Melbourne before Justice Finkelstein, as part of $1 billion plus joint class action.
Investors represented by Slater & Gordon and Maurice Blackburn have accused Centro Properties, and associated company Centro Retail, of misleading and deceptive conduct, failing to adhere to accounting standards, breaching continuous disclosure obligations and deliberately misclassifying its debt position.
However, yesterday both Centro and Maurice Blackburn attempted to have the Slater & Gordon “open class” claim struck out, however, after intensive argument by a bevy of barristers Justice Finkelstein reserved his decision on the matter.
Centro reveals its full year results on Friday.
Australian Property Journal
