CNP - Centro Properties Group

you will find that i posted this exact article a couple of hours ago at 855 am. the post before dingos...

it is definately a possitive article for centro. good to see that shareholders are in such a strong position, and the banks have such a weak one.

metric said:

you will find that i posted this exact article a couple of hours ago at 855 am. the post before dingos...

it is definately a possitive article for centro. good to see that shareholders are in such a strong position, and the banks have such a weak one.

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Given that the article was posted earlier, I have removed Dingo's posts. No point in having the same information posted twice.

1:21 PM Apr 16, 2008 Robert Gottliebsen
Centro's lifeline
TOP News

:bananasmi
Those buying Centro Properties shares at 47c are taking an interesting punt. Clearly if the banks pulled the plug on Centro and appointed an administrator or receiver Centro shares would be worthless.

But it's becoming increasingly likely that pulling the Centro plug is not a practical option for the banks – at least while the Centro management continues to perform. Yesterday I explained how the appointment of an administrator would trigger the destruction of the Centro shopping centre management agreements, which are currently generating more than $200 million a year in revenue.

On reading my comments Professor Kevin Davis, director of the Melbourne Centre for Financial Studies, responded that there is another reason why the banks would not want to pull the plug on Centro.

Davis says that, as the banks are unsecured Centro Properties creditors, they will want to avoid putting Centro into receivership because they would then face lots of aggrieved shareholders who under the Sons of Gwalia decision would rank equally with them and dilute the banks' recoveries.

Under the Sons of Gwalia precedent, shareholders who are successful in bringing actions against Centro will rank as unsecured creditors. The are plenty of Centro actions in the pipeline.

If the banks want to maximize their return from Centro they now have two reasons not to appoint an administrator. There is no doubt that, in time, Centro will be reconstructed. But unless that reconstruction delivers real value to Centro shareholders its is not going to be approved. In turn that increases the likelihood and power of Sons of Gwalia style actions.

Unless a magical buyer for Centro emerges – which currently seems unlikely but not impossible – a Centro reconstruction will see the banks convert much of their unsecured loans to equity. Just what the terms of any Centro reconstruction will be, remains very speculative. But any Centro reconstruction may need to take into account a Sons of Gwalia claim as well as the value of the management contracts.

We are receiving disturbing reports about the slump in American retailing on the back of US lower house prices and a falling economy. Many retail stores will shut which means that selling Centro's American shopping centres will not be easy.

But Centro's small, food oriented centres are much less vulnerable than the large discretionary spending malls like those owned by Westfield.

Once the market dust settles then these Centro shopping centres are perfect investments for superannuation funds – what's required is re-shaping the ownership vehicle. The sooner everyone focuses on that course of action the better.



Source businessspectator.com.au

More of the same really but worth a read;

http://business.theage.com.au/centro-gets-six-months-reprieve/20080416-26m2.html

I might be just guessing, but it looks as if a major holder has been selling down, since late yesterday and into today. Will wait to see. I dont think that means a whole lot in the scheme of things - once they are all sold down, the traders should come back.

By all reports, there should be an extension to the loan until at least september. If that gets announced, day traders will probably go into another frenzy.

An announcement about the extension is due by the end of April and I think it will be positive by all accounts. It will be more decision making time as to whether to sell/hold as the volatility will persist. I doubt if SP will go any lower than today from hereon but one of course can never be sure. I am a longterm holder by all intents and purposes from now on but if the market makes an offer I cannot refuse then all things are possible. Good luck to all.

Ruprect said:

I might be just guessing, but it looks as if a major holder has been selling down, since late yesterday and into today. Will wait to see. I dont think that means a whole lot in the scheme of things - once they are all sold down, the traders should come back.

By all reports, there should be an extension to the loan until at least september. If that gets announced, day traders will probably go into another frenzy.

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yeah, i agree, it should be positive. I dont think anybody, the banks included want to lose any more on this one.

It looks quite clear now that somebody major is selling down, just offloaded a million in one hit at 42c. What is interesting though, is that there is strong support - buyers are still lining up at that price.

Once the major gets rid of their holding, we may just see another quick bounce. Then of course its a matter of picking an entry point!

Ruprect said:

I might be just guessing, but it looks as if a major holder has been selling down, since late yesterday and into today. Will wait to see. I dont think that means a whole lot in the scheme of things - once they are all sold down, the traders should come back.

By all reports, there should be an extension to the loan until at least september. If that gets announced, day traders will probably go into another frenzy.

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Mmmmn, there have been so many articles on the banks giving Centro an extension until September that I would have thought that this news is already built into the price. From .23 to .42 is the price speculation of the news. I think it would take something extra to boost into the .6 range.

Allco is on the right track, steady updates - moving to the realization of its assets and gradually liquidating them, they are giving almost daily updates. If Centro can do this then at least it would be a move in a positive direction.
And it would be good to see if the current management have made any moves in the last month, or are they still on a preventative fire sale mission?

Could't agree more propergeez. Unfortunately I think the SP has allready factored the rumours and leaks in.

There is an article today in the WSJ of an interview with the CEO talking about progress to date, I think there will be coverage in tomorrows papers here in Oz. No big news, but indications that extension is looking positive.

I agree, there is some factoring in of the predicted extension. But it isnt totally factored in. After all, the extension is still only a possibility.

If it becomes reality, centro have another 6 months to find a solution. And that in itself is worthy of serious interest by the market.

http://www.businessspectator.com.au
/bs.nsf/Article/WEEKEND-READ-Centro-in-the-balance-DTA8T?OpenDocument

'At the moment the Centro priority is to obtain a further extension of the moratorium to September 30 to line the Australian lenders and the US bondholders up with the US banks.

That would not only buy time but reduce the perceived leverage of the prospective buyers of the wholesale funds or the parties offering to inject equity into the headstock. An extension might flush out more attractive bids.

It is probably also the case that the size of the Centro portfolios depresses value in conditions where debt is hard to access and very expensive. That would probably be a particular problem for the Australian fund which, while full of high-quality properties, is about three times larger than the US fund. Selling the individual properties in the two wholesale portfolios might produce better outcomes but would take a lot more time.

It is possible that the banks might be prepared to contemplate something more sophisticated than a simple extension of the moratorium until September 30. A longer extension would allow for a far more orderly realisation of assets and potentially shift the recapitalisation phase beyond the nadir of the sub-prime crisis.

As Gottliebsen suggested, it might also be possible for the banks to either help stabilise and recapitalise Centro themselves, through a partial debt-for-equity swap or by trading a longer extension for some exposure to Centro’s upside.

With their interests and those of Centro’s equityholders crudely aligned, the best chance they have of getting their money back intact is to ensure that there is something meaningful left for the equityholders. For any of that to occur, however, it is imperative that Centro get past the April 30 deadline with its portfolios intact and its funding secured for at least another five months.'
--

As previously stated, I've always held this view, we'll see a buyer too after 30 April and before Sept, but not while short term deadlines are in place, the sept is a done deal imo, what then come end of this month for the SP?

Well I would like too think $1 sp on the granted extension which will slowly grow on the decline of the sub prime fiasco
They may even get too keep everything intact

I think $1 on the granting of an extension may be a bit high, though I would welcome it. Perhaps 70c then building if the financial conditions improve in comming months. Will also depend on how the Oz banks go during their reporting season in May. If they are showing bigger then expected loses, buyers will still be cautious about CNP and the like. A good reporting season and people may think that the banks are able to support CNP for the long term. Given how ANZ has reacted to Opes and Lift, I don't think they are in a supportive mood!

Good Point, if the banks are prepared to support CNP for the longterm and allow the company to reestablish itself financially there would be no reason why the share price in the longterm recovers beyond the $2.50 mark (What has changed since the stock sat at $10.00????). Cashflow is one of the biggest advantages for CNP, hence why banks are reluctant(maybe no choice at this stage)to withdraw support.

Hopefully an extension by the banks will allow CNP to take its first steps in restructure. Time will tell and heres hoping.

Drubula said:

Good Point, if the banks are prepared to support CNP for the longterm and allow the company to reestablish itself financially there would be no reason why the share price in the longterm recovers beyond the $2.50 mark (What has changed since the stock sat at $10.00????). Cashflow is one of the biggest advantages for CNP, hence why banks are reluctant(maybe no choice at this stage)to withdraw support.

Hopefully an extension by the banks will allow CNP to take its first steps in restructure. Time will tell and heres hoping.

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Herald Sun article on CNP

http://www.news.com.au/heraldsun/story/0,21985,23562571-664,00.html

nothing new really, but gives a better indication of time and likely content of the announcement.

Cheers, Lavendar689

Today's neutral announcement

21 April 2008
Companies Announcement Office
Australian Stock Exchange Limited
10th Floor, 20 Bond Street
Sydney NSW 2000
Dear Sir
In regards to the article on page 18 of the Australian Financial Review today, as previously
announced, Centro Properties Group (Centro) is in discussions with a number of parties and lender
groups in relation to the recapitalisation process. These discussions are continuing but remain
incomplete. At this time, there is no certainty or assurance that these discussions will lead to a
transaction, what form such transaction may take, or what value might arise out of a transaction, if
any.
There have been offers received for Centro’s interest in the Centro Australia Wholesale Fund
(CAWF). The Group has reviewed the offers and is reconsidering the marketing strategy for this
interest to achieve the most value. This may include selling the CAWF properties in smaller
portfolios and/or individually.
The Centro America Fund (CAF) process started later than the CAWF process and is ongoing with
offers currently being considered.
Discussions are also continuing with lenders on the extension of facilities beyond 30 April 2008.
The Board will make decisions on its options in the best interests of shareholders and at the
appropriate times and will inform the market accordingly.
Yours faithfully,
Elizabeth Hourigan
Company Secretary

http://www.newsalerts.com.au/a.php?a=120473&code=CNP&source=ea7882f8a3e726b7d67e8425fedd3026

Centro says talks with lenders continue

April 21, 2008 03:54pm

SHOPPING centre operator Centro Properties Group says it is continuing to talk to a number of parties and lenders about its recapitalisation plans.

Centro reiterated in a letter to the stock exchange today that it had received offers for its interest in two of its related funds.

It's currently considering offers for the Centro Australia Wholesale Fund and may consider selling the fund's properties individually or into smaller portfolios.

It is still mulling its options in regard to the Centro America Fund.

Discussions are also continuing with lenders on the extension of facilities beyond April 30.

"These discussions are continuing but remain incomplete,'' Centro said.

"At this time, there is no certainty or assurance that these discussions will lead to a transaction, what form such transaction may take, or what value might arise out of a transaction, if any.''

CNP's releases are just covering their 'official line' due to privacy reasons on bids or extensions, even blind freddy's dog can see the extension will happen, sale of CAF or CAWF between now and the end of the month would be a great bonus but isn't going to change the scenario one bit for the Sept extension.

DYOR though, plenty of media reports citing it, the lenders have already shown their hand by extending twice, what's new to prevent them going to Sept to max sales returns in the interim or ride out the crunch, nothing I can see

I am not a financial whiz but it seems obvious to me too that if the banks have not pulled the plug yet as they have too much to lose, they will extend further as it is in their interests to do so. They are covering their own asses and ours too in the process but theirs are much more massively bigger

Trojax said:

CNP's releases are just covering their 'official line' due to privacy reasons on bids or extensions, even blind freddy's dog can see the extension will happen, sale of CAF or CAWF between now and the end of the month would be a great bonus but isn't going to change the scenario one bit for the Sept extension.

DYOR though, plenty of media reports citing it, the lenders have already shown their hand by extending twice, what's new to prevent them going to Sept to max sales returns in the interim or ride out the crunch, nothing I can see

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