Centro says it must restructure or fail

Struggling shopping centre owner Centro has produced statutory net profits of $2.7 billion after preparing its accounts on a “one-off” liquidation basis.

Underlying profit for the year ending June 30 was $14.6 million, compared with $173.8 million for the previous financial year.

The group stresses the importance of the restructuring of the business by December 15 to meet its debt obligations.

Failure to restructure as proposed on August 9 would most likely result in Centro being placed in the hands of external administrators, the group says.

Under the restructuring proposal Centro Properties Group will be wound up, with the remaining Australian assets held by subsidiary Centro Retail Trust and other unlisted Centro funds amalgamated into a new listed property trust.

Centro chairman Paul Cooper says: “The need to restructure Centro by 15 December 2011 is essential. This is the maturity date for our $2.9 billion senior debt and, as highlighted by Centro’s negative net equity position, there will be insufficient assets to repay this debt at maturity.”

The restructure plan will return 5¢ per security in cash to security holders.

Centro CEO Robert Tsenin says the restructure is “the only feasible prospect of delivering any value to security holders”.

“The alternative is likely to be external administration in which circumstances Centro security holders are expected to receive nothing”.

Centro has been in trouble since December 2007 when it ran into trouble refinancing about $1.3 billion in debt.