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centro shares soar 16 percent then settle...

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    Centro shares soar 16% then settle
    February 18, 2008 - 5:09PM

    Shares in Centro Properties Group rose as much 16 per cent after the property group won an extension to refinance $3.9 billion of maturing debt facilities.

    But the troubled supermarket owner isn't out of the woods completely, having only gained an extra few months breathing space.

    Centro said late last Friday night that its financiers in Australia and the US had extended its finance arrangements until the end of April.

    Investors regained confidence in the firm's outlook, snapping up shares.

    They rose more than 16 per cent at the open but settled back to be up two cents, or 3.28 per cent, by the time the market had closed.

    Shares in its listed trust, Centro Retail Trust, also gained ground early in the day but had lost 3.5 cents to 33.5 cents by the close of trade.

    Chief executive Glenn Rufrano, who arrived back in Australia from the US just over a week ago, said the group appreciated the cooperation of its lenders,.

    He said that they had allowed Centro sufficient time to complete a review of its recapitalisation options.

    "The strategic review is progressing well with a significant number of parties interested in pursuing a recapitalisation of the group," he said.

    Centro had until Friday to achieve an extension to refinance its liabilities.

    The company, which faced difficulty refinancing debt when credit markets froze in the wake of the US sub-prime mortgage crisis, is considering the sale of some of its assets.

    It had encountered trouble after borrowing heavily to pay for acquisitions to spearhead its expansion, especially in the United States.

    Centro is Australia's second largest shopping centre owner, with assets in Australia and the US.

    Debt facilities of $2.3 billion, under Australian arrangements, have been extended until April 30.

    Centro's US private placement note holders, who are collectively owed $US450 million ($A505 million), have agreed to extension arrangements similar to the Australian deal.

    Centro has already flagged the sale of some or all of its assets, including two wholesale funds.

    Mr Rufrano, who was previously head of Centro's US operations and replaced former chief executive Andrew Scott, said late last month that he was optimistic about achieving the refinancing extension with the company's bankers.

    Shares in Centro have lost about 88 per cent of their market value since mid-December when the firm first flagged its financial problems.

    ABN Amro Morgans Ipswich manger Tony Russell said the extension was a positive for Centro, but added that the firm still had a lot of work to do in the months ahead.

    "This certainly has not got them out of the woods but has added some comfort zone to retie up their debt," he said.

    "I think the market is willing to take a punt of them."

    © 2008 AAP


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