Centro restructure gets final nod of approval

The restructure of the Centro Properties Group into a new trading entity has cleared its final hurdle, with former auditor PricewaterhouseCoopers (PwC) deciding not to appeal a NSW Supreme Court decision in favour of the plan.

The accounting group had opposed the restructure – vital to Centro being able to meet its debt obligation and avoid liquidation – on the basis that it favoured equity holders over contingent creditors, of which it is one.

However, the court ruled that PwC would “emphatically be better off if the schemes proceeded than if they did not, and that there is no unfairness to PwC inherent in the schemes of arrangement”.

PwC’s decision not to appeal follows Centro shareholders, bond holders, hybrid lenders and senior creditors voting in favour of the amalgamating the various Centro businesses into a $3.4 billion listed trust to be called Centro Retail Australia on November 22.

It brings to an end a four year debt crisis that began at the height of the GFC in December 2007 when Centro was forced to negotiate extensions to debt obligations of around $1.3 billion.

The new entity is expected to begin trading on December 14.

As part of the restructure, $2.7 billion owed to Centro’s senior lenders that was due to be paid by December 15 will be cancelled in exchange for substantially all of Centro’s Australian assets and interests being transferred to these lenders.

Centro shareholders and bond holders will be paid 5.03¢ per share, equating to $49 million and $21 million respectively in exchange for redemption of their shares and convertible bonds.

Hybrid lenders will be paid $20 million in return for the cancellation of their debt.

An additional $10 million has been set aside for potential contingent creditors, with any surplus not used is to be returned to senior lenders.

Payments will be made in approximately three weeks.

Centro chairman Paul Cooper described the approved restructure as a “major achievement for Centro and its stakeholders”

“We are extremely pleased that all approvals have now been received for the proposal, which will result in Centro security holders receiving 5.03¢ per Centro security.”

Centro had warned that failure to secure the restructure would have resulted in shareholders receiving nothing.