Centro shares up after revised restructure proposal

Shares in Centro Retail Trust have surged 26% to a high of 31.5¢ today on hopes that a revised and sweetened restructure proposal will be accepted by shareholders.

Shares in parent company Centro Properties, which has been selling off its regional  and neighbourhood centres this year, also rallied, increasing by 8.3% to 3.9¢.

This follows the retail trust offering its external investors a 10% improvement on their stake in the new entity – Centro Retail Australia – which would emerge under the restructuring proposal.

The improved offer was made after New York hedge fund Marathon Asset Management, which holds nearly 9% of Centro Retail Trust, and Sydney-based Orbis Funds Management, which holds nearly 5%, indicated they would vote against the merger in its previous form.

Proxy votes from Centro Retail shareholders on the resolution were due by 4pm today, with remaining shareholders voting in Melbourne tomorrow.

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 faces a December 15 deadline to pay back $3 billion of debt, which it cannot meet under its existing structure.

Failure by the board to win approval for the restructure will most likely cause the company to be placed in the hands of external administrators.