16/01/2009 - 08:02

Centro completes deal with lenders

16/01/2009 - 08:02

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Debt-laden Centro Properties Group completed a long-term refinancing agreement with lenders today, delivering its lenders 90 per cent of the company's equity and reducing pressure for asset sales.

Centro completes deal with lenders

Debt-laden Centro Properties Group completed a long-term refinancing agreement with lenders today, delivering its lenders 90 per cent of the company's equity and reducing pressure for asset sales.

The company's shares have been in a trading halt since Wednesday and in early trade today surged 4.5 cents or 37.5 per cent to an intrady high of 16.5c before closing at 12.5c.

A trading halt on securities in Centro's 51 per cent owned retail property trust Centro Retail Group has also been lifted.

The agreement includes a three year extension on the $3.9 billion senior syndicated debt facility, Centro said in a statement to the Australian stock exchange.

The agreement included a new $35 million working capital facility and $1.05 billion hybrid security to improve cash flow servicing and balance sheet strength.

The deal also includes the issuance of new stapled securities to Centro's lenders.

At 1018 AEDT, securities in Centro had retreated to trade up two cents, or 17 per cent, at 14 cents in heavy trade.

Securities in Centro's retail property investment unit, Centro Retail Trust, fell half a cent to 10.5 cents.

"The three year debt stabilisation agreement achieves our objective of securing the long term viability of the group, and will have the effect of maximising cash flow through the re-structuring of our debt arrangements and minimising asset sale requirements," chief executive Glenn Rufrano said in a statement.

"This debt stabilisation provides sufficient time and liquidity to navigate difficult market conditions and maintain focus on our shopping centres and the operation of the funds management business."

As part of the agreement, Centro will issue 125 million new stapled securities to its lenders, which is equivalent to 14.8 per cent of the outstanding securities.

The new securities were issued at 11.27 cents each.

Centro said the new securities, combined with the hybrid securities, would mean that its lenders would hold 90.1 per cent of the company's ordinary securities, following a conversion to equity of the hybrid securities.

The hybrid securities will have a seven-year term with a five per cent per annum interest rate, which will increase to 7.5 per cent from 2012.

All of Centro's surplus cash will be used to repay the secured debt and all the new lending facilities have been simplified, with reporting requirements to be reduced to lower costs.

Additionally, Centro will not be allowed to make any dividend payments for the term of the senior secured debt facility and distributions will be unlikely till the hybrid securities are converted.

The $35 million working capital facility will have a margin of 3.75 percentage points.

Centro's facilities of $US1.3 billion ($A1.95 billion) associated with its Super LLC joint venture with Centro Retail and CMCS 40 trusts will continue as term loans maturing on December 31 2010.

Centro will also restructure its hedging arrangements, closing out many of the positions.

The company expects to announce its first-half results in the last week of February.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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