centro battle far from over..article

Article from the Australian Today..

Centro Battle far from over despite win..

AS the pieces for Centro's salvation finally come together, two separate groups of stakeholders are sharpening their knives for the fight ahead.

Centro chief Robert Tsenin might feel like he has already done the hard yards in getting lenders to agree on a $3 billion debt-for-equity swap that will merge all of Centro's funds into one listed company but, for some, the job is only half done.

An army of lawyers gathered at the NSW Supreme Court yesterday for the first hearing to approve the proposed scheme of arrangement for the transaction. It addressed little more than administrative matters, but the two points to come out were that the lenders need to get the deal sorted by December 15, when $3.1bn of debt falls due, and that the pending shareholders class actions be counted as the only formal "objector" to the transaction.

But two other groups are readying to fight the deal. The first is shareholders in Centro Retail Group (CER), with hedge funds York Capital and Marathon Asset Management and opportunistic investor Orbis. With Centro Properties Group (CNP), which owns half of CER, not able to vote, the trio could control the vote on the deal, which requires 75 per cent approval. Orbis managing director Simon Marais has been vocal in his opposition to the deal, believing that CNP should be allowed to fail and CER's management internalised.

Marais says Tsenin and his board need to provide shareholders with more details and worries that CER's 44c a share net tangible asset could be threatened under the deal (although Tsenin says that figure should go to $2.50 once the deal is done). "Given the company's track record, it is important that shareholders make up their own mind," Marais said yesterday.

Over at CNP, where shareholders and hybrid security holders also need to approve the deal, there's growing discord among minor stakeholders about the deal, which offers just $100 million to be split between them. While Centro reckons it will just tip the company into receivership and get a deal done through the backdoor if stakeholders don't approve it, others argue this would create significant costs for the company. One of the costs is thought to relate to the stamp duty payable if a deal is done out of receivership.

No one knows what the amount is, but it's thought stakeholders' requests to have this number made public have so far fallen on deaf ears. The difficulties with dealing with asset level debt in a receivership is another factor worth considering, they say. Some of these questions should be answered when the detailed merger documents are released. But ASIC is still poring over the documents and the danger is that Centro's timetable gets derailed.