CER 0.00% 32.0¢ centro retail group

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    Boost for Centro as new broom sweeps in

    * Carolyn Cummins Commercial Property Editor
    * February 29, 2008

    UNITS in Centro Retail Trust were driven 30 per cent higher yesterday to 41c as the new management moved to restore confidence that the stock was unlikely to head into receivership.

    There was also heightened speculation in the market late yesterday that the US-based private equity firm Blackstone Group, Mirvac, the Malaysian group Mulpha International and a funds management arm of General Electric were all jostling to bid for a controlling stake in the Centro stable.

    The chief executive of Centro, Glenn Rufrano, yesterday told analysts that AT WORST,THE TRUSTS TOTAL DEBT WAS $1.2. BILLION, equal to 57c a unit. The group was continuing with its review to see how best to refinance the troubled company, he said.

    As part of that review, Centro is selling its stake in its wholesale funds. But Mr Rufrano said Centro trust was not selling any physical assets in which it held an interest.

    The bank syndicates in Australia and the US had to approve any asset sales, which helped to appease investors, Mr Rufrano said.

    He also affirmed a question from Andrew Parsons, of Resolution Capital, that the board structure was being reviewed and that independent directors would be appointed.

    One of the many concerns besetting the Centro stable was the very complicated ownership structure between the trust, the main group, Centro Properties and myriad unlisted funds and syndicates, all of which were run by the same board of directors.

    For the half year, Centro Retail reported a net loss of $271 million for the first half, compared to a $42 million in the prior corresponding period, mainly due to writedowns of in US retail valuations.

    Mr Rufrano replaced Centro's founder, Andrew Scott, last month after the country's second-largest retail landlord was unable to repay a $3.9 billion debt bill by last December.

    Since joining the group, Mr Rufrano has negotiated an extension until April 30 with the Australian banks and September 30 with the US banks.

    Mr Rufrano yesterday said all distributions for the half year had been suspended, as has been any future growth guidance. He confirmed that the parent group Centro Properties reports its results today.

    John Snowden, head of property securities at Colonial First State, said: "From what we have seen today it is probably better than the market expected. In revenue and cash-flow terms the business is going well, even though there have been some negative valuations."

    Centro Retail has dropped 69 per cent in unit value since December 17, when Centro Properties announced the group's debt struggles.

    "If you are wounded, people will try to eat you," Mr Rufrano said. "People believe Centro is wounded but we will cure ourselves."
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