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January 16, 2008 |
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CENTRO PROPERTIES: CEO Quits; Asks Payment Deadline Extension Centro Properties Group's chief executive officer, Andrew Scott, stepped down from his post and will be replaced by Glenn Rufrano, who heads Centro's business in the United States, Bloomberg News reports, citing a company statement filed with the Australian Stock Exchange. Moreover, according to Bloomberg's Laura Cochrane, Centro Properties asked its lenders to extend a Feb. 15 deadline to refinance AU$3.9 billion (US$3.5 billion) of debt. American and Australian banks are considering Centro's extension request, as are investors who bought US$450 million of Centro debt in U.S. private placements, Bloomberg cites the company as saying. Those noteholders told Centro on Jan. 11 that they were concerned the company may be in default on at least some of that debt. Ms. Cochrane notes that Centro stock has slumped 89% since a Dec. 17 announcement that the company was struggling to pay its debts. According to Bloomberg, Mr. Rufrano joined Centro after it paid US$5.2 billion in cash and assumed debt for New Plan Excel Realty Trust, the company he ran for seven years, in the biggest U.S. acquisition by an Australia-based real estate investment trust. The deal made Centro the fifth-biggest mall owner in the U.S. and boosted the company's debt to 44% of total assets. "They really do need someone who is familiar with the U.S. property market because it's a very localized market," Bloomberg quotes John Snowden, head of property securities in Sydney at Colonial First State, Centro's largest shareholder. Rufrano was "very capable" when he ran New Excel, Mr. Snowden added. Bloomberg explains that Centro's U.S. business accounts for 65% of the company's AU$26.6-billion worth of assets under management after Mr. Scott oversaw US$9 billion of acquisitions. That left the company vulnerable when the subprime mortgage market collapsed, forcing banks to write down more than US$35 billion and driving up borrowing costs. Mr. Scott put Centro and some of its assets up for sale Jan. 2, the report recalls. Centro's traditional sources of funding in the U.S. commercial mortgage-backed securities market were "shut for business," the company said Dec. 17. The report notes that the former CEO will receive a AU$1.5-million payout, as well as any accrued salary or other benefits, and Centro will pay him a further AU$1.5 million on March 31, 2008, provided he fulfills obligations to provide advice to the company. Centro Properties Group -- http://www.centro.com.au/ -- is a Melbourne, Australia-based company that comprises the operations of Centro Property 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, Heritage Property Investment Trust and Galileo Funds Management, as well as assumed full ownership of its United States management operations. The Troubled Company Reporter-Asia Pacific reported on Jan. 4, 2008, that Standard & Poor's Ratings Services lowered its issuer credit, senior-unsecured debt and preferred stock ratings to 'CCC+' with negative implications reflecting the potential of the group's assets to be sold in softening market conditions, particularly in the U.S. |
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