Centro unveils restructure, securities soar 17% March 1, 2011 - 1:11PM
Centro Properties Group has confirmed it will sell all its United States assets and look to merge all Centro properties into one fund as part of a restructure aimed at returning value to shareholders.
Centro said on Tuesday it had entered into an agreement to sell all of its US assets and services business to BRE Retail Holdings Inc, an affiliate of Blackstone Real Estate Partners, for $US9.4 billion ($A9.24 billion).
It has also entered into a heads of agreement with with holders of 73 per cent of its senior debt to restructure its headstock debt facilities. Advertisement: Story continues below
If successful, the debt restructure will see all of Centro's external senior debt extinguished, and the group will have no substantial assets other than a cash sum of up to $100 million to be distributed to securityholders and junior lenders.
Centro said it was also in discussions with Centro Retail Group, Centro Australia Wholesale Fund, Direct Property Fund and other Centro syndicates to create a single portfolio of Australian shopping centres once the US assets sale was complete.
Centro Properties securities were up 2.5 cents, or 16.7 per cent, to 17.5 cents after coming out of a trading halt following the release of the restructure details.
Centro Retail securities gained half a cent to 35 cents.
??We have previously said that the capital structure of Centro is unsustainable in its current form,?? Centro chairman Paul Cooper said.
??The headstock debt restructure, if approved, will return Centro to a positive equity position and potentially allow Centro to return some value to its stakeholders.??
The headstock debt restructure is contingent on senior lenders accepting the amalgamation of the Australian funds plus stakeholder approvals once the transaction structure is finalised.
Centro said substantial work was required to finalise the restructure of the asset portfolio into one fund, and there was no certainty it would occur or in what form the amalgamated fund would take.
Centro Retail chief executive Robert Tsenin said an amalgamation could create an attractive portfolio of high quality Australian assets.
The steps announced were a major milestone for Centro, Mr Cooper said.
??In view of Centro?s 31 December 2010 equity position of negative $1.6 billion and the 15 December 2011 maturity of its senior debt facilities, we did not underestimate the challenge of delivering value to all stakeholders through this process,?? he said.
AAP
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