 |
December 18, 2007 |
|
|
|
 |
CENTRO NP LLC: S&P Cuts Issuer Rating to BB+ as Debt Costs Rise Standard & Poor's Ratings Services had lowered its issuer credit rating on Centro NP LLC to 'BB+' from 'BBB'. At the same time, the senior-unsecured debt and preferred stock ratings on Centro NP (formerly New Plan Excel Realty Property Trust) were lowered to 'BB+' and 'BB-', respectively, from 'BBB' and 'BBB-'. All the ratings remain on CreditWatch with negative implications, where they were placed on Dec. 13, 2007. These rating actions follow Centro Properties Group's (CNP; not rated) announcement that increased costs associated with the group's extension of its debt facilities, and additional costs associated with the refinancing, will adversely effect CNP's earnings, forecast distributions, and financial flexibility. Standard & Poor's notes that CNP's financiers agreed to extend the group's AU$2.7 billion short-term debt maturities until Feb. 15, 2008. In response, CNP will not pay a December half- year distribution to its stapled security holders. At the same time, Centro Direct Property Fund and Centro DPF International suspended applications and redemptions. Furthermore, the covenants on CNP's bank facilities are likely to be revised such that gearing reduces from the current level of 50%, and interest cover increases from the current level of 2.0x. Moreover, CNP pledged to undertake a strategic review to examine asset sales, equity injections, and new debt facilities. "These actions by CNP may impact the creditworthiness of Centro NP, given the rating on Centro NP incorporates the implied credit quality of CNP because of their close relationship," Standard & Poor's credit analyst Craig Parker said. "Nevertheless, Centro NP's credit quality may be partially insulated from the deteriorating credit quality at CNP if Centro NP continues to operate within its debt covenant package." To resolve the CreditWatch, Standard & Poor's will seek to understand the cash-flow impact of the increased interest margins on CNP's debt facilities and how the business model will evolve following the loan-renegotiation process. As a consequence, we will also try to determine the impact that the increased margins will have on the variable debt funding at Centro NP. In addition, we will seek to understand how CNP will manage Centro NP's financial metrics within the bond covenants. Centro Properties Group -- http://www.centro.com.au/ -- is an Australia-based company that comprises the operations of Centro Property Trust (the Trust) and its entities, which are engaged in property investment, property management, property development and funds management. The Company operates in two business segments: property ownership business and services business. The Company derives income from retail property rentals of shopping center space to retailers across Australasia and the United States. It also derives income from its retail property investments in listed and unlisted entities. Its services business activities include incorporating funds management, property management and development and leasing. During the fiscal year ended June 30, 2007, the Company acquired New Plan Excel Realty Trust (New Plan), Heritage Property Investment Trust (Heritage) and Galileo Funds Management, as well as assumed full ownership of its United States management operations. |
|
|
||
|
Today's Top Stories have been selected from the Troubled Company Reporter - Asia Pacific. To receive the Full TCR-AP please CLICK HERE.
