WSJ. AUGUST 4, 2010. Centro Ponders a Great Divide
Having clinched extensions on billions of dollars of debt last week, Australian shopping-center owner Centro Properties Group now aims to set a restructuring course that could culminate in a split of the company's Australian and U.S. holdings.
Centro, which owns 600 U.S. shopping centers and 112 in Australia and New Zealand, was among the first commercial landlords to run afoul of lenders in the downturn when it disclosed in December 2007 that it couldn't refinance billions of dollars of debt coming due.
Since then, it has gained due-date extensions by giving its lenders 90% of its equity.
With Centro now having pushed off its most pressing maturity of $2.3 billion of debt to December 2011, Chief Executive Robert Tsenin wants to finally resolve Centro's debt issues within that time frame. In total, Centro has roughly $16.6 billion of debt.
Logically, Centro's end game could include splitting Centro's U.S. and Australian holdings, since lumping them together brings "no synergies," the CEO says. But before a split can occur, Centro still must unwind some of the agreements within its infamously complicated structure.
A U.S.-Australia split "is certainly an option," Mr. Tsenin said in an interview last week. "The execution of it, if it were to happen, is not going to be straight-forward."
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