Centro wins one month extension to debts

Debt-laden Centro Properties Group has been granted a stay of execution, securing a one-month interim extension for all of its debt facilities totalling $6.01 billion that expired on Monday.
Centro said after market close on Tuesday that it had reached an in-principle agreement with all of its 23 financiers to achieve a long-term refinancing and stabilisation plan for the ailing group.
Australia's largest property investor said the interim extension gave it time to complete documentation for the refinancing and stabilisation.
Centro owes $3 billion to eight domestic banks, $US1.5 billion ($A2.23 billion) to five US banks, and another $US450 million ($A671 million) to 10 US insurance companies.
Commonwealth Bank is Centro's largest secured creditor, with $1 billion of Centro's $1.2 billion in total debt to the bank being secured.
National Australia Bank has a secured exposure of $750 million, and an unsecured exposure of $200 million, while Westpac has a secured exposure of $558 million.
ANZ Banking Group's secured exposure is $700 million and its unsecured exposure is $680 million.
Under the new agreement, Centro can use a revolving working capital facility up to $35 million.
Of the $5 billion senior secured debt owed to the Australian lending group and US private placement noteholders, $1.05 billion will be replaced by a hybrid security and $4 billion will be converted into term debt loans.
Goldman Sachs JBWere define hybrid securities as being a mixture of the
characteristics of shares and fixed interest products.
"The $1.05 billion hybrid security will be senior secured convertible bonds
subscribed for by the Australian lending group," Centro said.
"The hybrid security will have a seven year maturity date and the potential for
conversion into ordinary stapled securities.
"All interest payable on the hybrid securities is expected to be capitalised.
"Any conversion to ordinary stapled securities would be subject to a number of
conditions, including approval of Centro ordinary security holders."
Centro said the $4 billion of remaining existing senior secured debt owed to the
Australian banks and US private placement noteholders will be converted into term
loans maturing on December 15, 2011.
Stapled securities equivalent to 14.9 per cent of Centro's existing issued
securities will be issued in mid-January to the Australian banks and US private
placement noteholders on a pro rata basis at market value.
The proceeds will be used for payment of outstanding lender fees and expenses.
If converted in full, the hybrid securities would constitute 90.1 per cent of
Centro's fully diluted ordinary stapled securities.
Centro said no distributions to ordinary securityholders were permitted to be paid
for the duration of the senior secured debt facility.
Centro has been in lengthy negotiations with the banks and US insurance company
noteholders over their $6.01 billion debt agreement with Super LLC, a joint venture
between Centro Properties Group and Centro Retail Group.
The property giant said on Tuesday that facilities of $US1.3 billion ($A1.94
billion) associated with Super LLC would be converted into term loans maturing on
December 31, 2010.
Also, a facility of $US370 million ($A552 million) will be provided to Super LLC by
the existing US lenders, which will be used primarily for the repayment of
indebtedness and will provide additional liquidity.
"Centro will provide certain collateral to the Super LLC lenders to secure the
release of Centro guarantees within the Super LLC structure," it said.