Centro liquidates assets and eyes restructure
Centro Properties Group has announced liquidation value adjustments of $1.3 billion ahead of a proposed restructure and the maturation of its senior debt.
Centro announced a statutory net profit for the 2011 financial year of $2.7 billion, arising largely from those liquidation adjustments but stressed that profit is not the result of sustainable profit and growth.
Centro described the liquidation adjustment as a one-off accounting entry to adjust net assets from negative $1.3 billion to zero. With an adjustment of around negative $400 million for convertible bonds (which rank ahead of ordinary equity) net equity attributable to Centro's ordinary shareholders is negative $1.7 billion.
The group requires a restructure before its senior debt of $2.9 billion matures in December because it will not have sufficient cash to fund interest, overheads and other ongoing expenses, and could not repay its senior debt maturing on that date. Without a restructure, it is likely that external administrators will be appointed, Centro stated.
"The restructure is the only feasible option for Centro to emerge from the extensive review of alternatives undertaken," said Centro chairman Paul Cooper.
"Centro cannot trade its way out of the debt situation - even after the moderate recovery in Australian asset values during the past year reflected in the improvement in investment property values, the debt is simply too large and cannot be refinanced when it matures in just under four months time," he said.
The proposed restructure would make available to shareholders 5 cents per security, but if external administrators are appointed shareholders are likely to receive nothing, Centro stated.
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