centro ultimatum..full article from afr

Major investors in Centro Retail Trust are threatening to scuttle the $3.4 billion restructure of Centro’s property empire unless their stake in the new vehicle is improved.

Among them are New York-based funds Marathon Asset Management, York Capital and Paulson & Co, along with Australian investor Orbis Funds.
Although these funds and others are acting individually, their combined stake on Centro Retail's register amounts to about 20 per cent.

The Parent Centro Properties Group, holds just over half of Centro Retail, which it cannot vote in the amalgamation ballot on November 22.

That increases the hedge funds' voting power as result.Most ballot items need 50 per cent of votes cast to be accepted.
Senior lenders will swap debt in the Centro parent for equity, ending with a 73.9 per cent slice of the proposed Centro Retail Australia.
Centro Retail's so-called external investors - among them the New York Hedge Funds - will get 14.5 per cent. External investors in Centro's Direct Property Fund will get 11.6 per cent.
The hedge funds have been meeting Centro's management and advisers. Some of them have said they want the proposed stake alloted to Centro retail's external shareholders improved by up to 30 per cent.

Another criticism is the $200million valuation of Centro's management platform. Centro Retail investors will effectively lose some net tangible asset for a stake in the platform, which some say is worthless.
As well, the plan to issue top-up shares to other stakeholders, compensating them for any potential lawsuit payouts, has angered Centro retail investors because their stake in the new vehicle would be diluted.

The Australian Financial Review has learnt that Marathon has met Centro's Management and advisers this week and indicated it would vote down the deal if changes were not made.
Centro's Management has said that if the restructure is not approved, it is probable the parent company will go into administration.

Significant uncertainty would follow for Centro Retail, which the parent company co-owns and manages.
Orbis Funds boss Simon Marais said that uncertainty could end up being either good or bad. The current restructure proposal was "definitely bad", he said. "I'd be amazed if this deal goes through in its current form, it's too one-sided."

A source involved in the restructure said there was still some wiggle room to modify the ownership proportions in the new Centro deal, less than two weeks before the ballot.
Proxy advisors CGI Glass Lewis and ISS have both recommended all proposals at the restructure vote.

Another source described the push by Marathon and the other funds as "greenmailing" which could cost senior lenders $500 million. "They are not going to change a fair deal for a couple of New York Hedge Funds."