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punters bale out of centro...

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    Punters bale out of Centro
    Carolyn Cummins Commercial Property Editor
    February 20, 2008

    INVESTORS took the knife to the troubled Centro Properties Group yesterday amid concerns of costly legal actions, continued lack of disclosure and likely expenses involved in the extension of its $3.9 billion in financing agreements.

    At yesterday's market close Centro's securities were down 11c, or 17 per cent, to 52c, its lowest level in the past month, while stablemate Centro Retail Trust was sold down 2.5c to 31c.

    Yesterday's selling wiped out all the ground the stock had gained on Monday when it confirmed it had convinced its Australian and US bankers to extend the debt repayment deadlines.

    But the decision to reclassify a further $1.5 billion in debt as short-term has angered security holders and heightened the possibility of threatened class actions.

    Brokers have allowed for between $150 million and $200 million for potential legal costs that Centro could face in the coming year.

    Concern was also raised as to how much it cost Centro in new fees to get the banks' extension.

    Fuelling yesterday's selling was the decision by the rating agency Moody's Investor Services to put the ratings of all seven classes of commercial mortgage backed securities, issued by the then Centro Shopping Centre Trust in 2006, on review for a downgrade.

    Brokers and fund managers said yesterday the market was very worried about what other disclosures could be made when Centro reports its results on February 28, and the long-term ramifications of any legal action.

    Winston Sammut, director of Maxim Asset Management, said the whole issue should be "got out of the way".

    JP Morgan, the former adviser to the Centro group and now a creditor, issued a warning that it had allowed for $150 million of legal costs in its net asset valuation.

    "Whilst [the refinancing package] is certainly a step forward, its lenders still have Centro on a very short leash … and there's 2008 debt facility expiries of $7.4 billion," JP Morgan said.


    Cheers, Pie :-)
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