Well this one wont go away.How much for my...

Well this one wont go away.
How much for my share's??

Cheers
Hotlegs

Hedge funds eye a sale of troubled Centro Properties' assets Turi Condon, Property editor From: The Australian June 14, 2011 12:00AM
Hedge funds eye Centro Properties Group sale Source: The Australian
LENDERS to Centro Properties holding debt of more than $2 billion last week offered to sell the debt to Lend Lease in a deal that would have effectively delivered control of the troubled shopping centre group to the development and construction giant.
Centro's debt has traded as low as 50c in the dollar but hedge funds, led by US-based Davidson Kempner Capital Management and David Tepper's Appaloosa Management, offered their senior debt in the shopping centre group at significant premium to the current trading range of about 70c-75c in the dollar.

Lend Lease has rejected the hedge fund offer but reaffirmed its interest in buying Centro's $7.2bn Australian shopping centre portfolio, according to a letter from Lend Lease chief executive Steve McCann.

In the letter dated June 7, Mr McCann wrote: "We have confirmed our interest consistently over the past three years through the numerous approaches we have made to Centro in relation to its Australian assets, including in our letter dated February 2011."

Mr McCann's letter, which also rejected the debt offer, was addressed to Centro Properties chairman Paul Cooper and Peter Day, chairman of listed sister trust Centro Retail Trust, and was copied to Centro group chief executive Robert Tsenin.

On the previous day, Centro Properties' advisers, Moelis & Co, held a conference call with Mr McCann at which the offer of the debt was discussed, according to industry sources.

Also on the call were executives from Lend Lease's advisers, Goldman Sachs & Partners Australia.

Centro, which owns or manages 103 shopping centres in Australia, including Centro Galleria in Perth, Centro The Glen in Melbourne and Centro Colonnades in Adelaide, has teetered on the brink of collapse since late 2007.

In March, Centro announced both the sale of its US shopping centres to US private equity giant Blackstone Group for $US9.4bn ($8.9bn), and a plan to create a new Australian-only listed retail property trust by amalgamating the Australian shopping centres held in a variety of Centro funds.

Any sale of the debt could scuttle the plan to reinvent Centro. Documents for the recapitalisation and relaunch of Centro "mark 2" are due to be finalised in the next two months, according to market sources.

Mr McCann's letter said he was surprised that Centro Properties' advisers, Moelis, had asked if Lend Lease was prepared to make an offer for all the senior debt.

Centro Properties Group debt had a value of $3.1bn and hedge funds had bought more than 70 per cent of that, sources said earlier this year.

In his letter, Mr McCann also noted that Moelis had been asked to contact Lend Lease on behalf of the Centro boards after discussions between the boards and the senior lenders.

Industry sources have now questioned Centro's lenders' commitment to the recapitalisation and relaunch, given their approach to Lend Lease.

Another source said selling the assets to Lend Lease or another party was no less complex than relaunching the trust and would require as many approvals from the myriad parties involved. This was why the debt had been offered for sale instead, he said.

However, this path would raise corporate governance issues, according to one industry analyst.

A spokeswoman for Centro told The Australian: "Centro continues to assess its options, but it is full steam ahead with the amalgamation (relaunch of the new trust).

"Negotiations are progressing well and all parties believe that it represents the best option for investors."

A Lend Lease spokeswoman said yesterday: "As we have said on many occasions, Lend Lease is not aware of any process other than that which Centro announced in March 2011." Goldman Sachs declined to comment.

Last month, The Australian reported that Lend Lease was still interested in Centro's Australian shopping centres, while early this month London's Financial Times reported that in February a Lend Lease-led consortium made a $4.96bn indicative cash offer for Centro's Australian assets.

At a Lend Lease investor day briefing in Sydney last month, Mr McCann described reports that Lend Lease had made a recent offer for the Centro portfolio as "woefully badly researched and inaccurate".

"(Centro) announced an outcome of their process in mid-March on the sale of the US business (to Blackstone) and recapitalising in Australia. That's the only process we are aware of. All the other speculation is exactly that," he said at the time.