T HE d e b t - l a d e n Ce n t r o Properties Group will sell all of its United States assets and exchange its Australian assets in order to cancel its debt.
T h e s h o p p i n g c e n t r e owner is one of Australia’s highest profile casualties of the global financial crisis, posting billion dollar losses and struggling to meet debt repayments as property values plunged.
Centro and its managed funds will sell the US portfolio of about 600 shopping centres to BRE Retail Holdings Inc, an affiliate of Blackstone Real Estate Partners, for $ 9.24 billion.
Centro will receive proceeds of $ 600 million from the deal, after repaying underlying property debt, while Centro Retail Trust will receive $ 500 million.
Centro Retail will use the proceeds to pay down its Australian property debt, and forecasts its gearing to fall from 75 per cent to 43 per cent.
Alongside the US asset sale, Centro has outlined its l ong-awaited restructure plans.
This involves the cancellation of Centro’s senior debt in exchange for its Australian assets, and the amalgamation of its funds’ assets into one portfolio.
The holders of about 73 per cent of Centro’s senior debt have also agreed to make $ 100 million available to Centro stakeholders and s e c u r i t y h o l d e r s i n exchange for the debt cancellation.
executive Robert Tsenin said the distribution of those funds would prove difficult.
‘‘ The $ 100 million is going to be made available for a variety of stakeholders, not just our shareholders,’’ he told journalists.
‘‘ The process the board will have to undertake is going to be quite difficult and will be undertaken with a great deal of care to work out an appropriate way of dividing that among the various stakeholders.’’
T h e d e b t c a n c e l l a t i o n plans were in their early stages, with no certainty of the plan progressing, Mr Tsenin said.
Along with stakeholder approval, it is contingent on the proposed amalgamation of the assets of Centro managed funds.