Restructure to solve Centro's debt

Published on Fri, 25/02/2011, 01:45:57

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Centro Properties has reaffirmed that it continues to investigate its options in order to support the operation of the company, but its directors hope that a restructure could potentially save the debt-ridden business.

Chief executive Robert Tsenin said CER agreed with the co-owners of its assets, including Centro Properties Group, to commence a competitive market process to formally evaluate interest in its Australian and US investments.

“Evaluation of indicative proposals received by CER and its advisors has been ongoing. At the same time CER has continued to consider other restructuring and recapitalisation alternatives, with the overriding objective of maximising value for CER securityholders,” he said.

He also reiterated that as previously announced during calendar year 2010, number of confidential expressions of interest and proposals were received in respect of CER’s assets and investments.

This comes as the company announced a $553 million half-year profit. But underlying profit fell by 42 per cent from $82.7 million to $48.2 million, which was in line with guidance.

Tsenin said that whilst CER has a portfolio of high quality shopping centres in both Australia and the US delivering solid underlying operating performance, it continues to face a number of significant challenges:

“CER continues to be negatively impacted by both financial and structural issues and as stated previously, CER has too much debt,” he said.

“On a lookthrough basis CER’s gearing ratio, excluding its investment in Super LLC which has been fully impaired, is 75 per cent, which is significantly higher than our preferred level and the average across our peers.

“The alternatives being evaluated by CER and its advisors are at a sensitive stage and span proposals to sell certain assets, through to recapitalisation. Due to both the commercial sensitivity of the discussions and their confidentiality, no further details can be provided at this stage, however, I assure you that significant progress is occurring and we, and our advisors, are working diligently to deliver the best outcome possible.”.
 


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