Australian mall owner Centro gets new debt lifeline

MELBOURNE/SYDNEY (Reuters) - Centro Properties Group (CNP.AX), one of Australia's highest profile casualties of the global credit crisis, was given a lifeline on Tuesday when lenders agreed to refinance $4.65 billion in overdue debt.

Without the refinancing, Centro could have been forced into administration by its creditors, potentially triggering a fire sale of retail properties in the United States, Australia and New Zealand.

"This outcome will stabilise Centro and provide sufficient liquidity with time for the company to maximise the value of its property operating platform and funds management business," Centro Chief Executive Glenn Rufrano told reporters during a teleconference.

Centro's Australian lenders have agreed to swap A$1.05 billion ($697 million) in debt for convertible bonds, worth 13-14 cents per Centro security, or roughly a 50 percent premium to Centro's last trade.

Those lenders include Commonwealth Bank of Australia (CBA.AX), National Australia Bank (NAB.AX) and Australia and New Zealand Banking Group (ANZ.AX).

Centro also agreed to issue securities worth 14.9 percent of its share base to its Australian lenders and U.S. note holders to cover around A$10 million in lenders' fees.

Combined with those securities, if the bonds are fully converted, lenders would own 90 percent of Centro.

The A$4.0 billion of remaining debt owed to the Australian lending group and U.S. noteholders will be converted into term loans maturing on Dec. 15, 2011.

In addition, Centro's U.S. lenders, which include JP Morgan (JPM.N) and Bank of America (BAC.N), have agreed to extend $1.3 billion in debt to Dec. 31, 2010, and are lending an additional $370 million.

Centro has been struggling to sell shopping centres to help pay down debt after credit markets froze following its rapid expansion in the United States last year. Rufrano the group will continue trying to sell some of its U.S. and Australian malls.

Its lenders have given it a series of extensions this year, reluctant to cut the lifeline and face selling the group's malls into sliding property markets in the United States and Australia.

The only mall sale to go through so far is four Australia and New Zealand malls, which it agreed to sell in September for A$157.5 million, below book value.

Centro's shares, on a halt since Friday pending the announcement, have plunged 98 percent over the past year, last trading at 8.7 cents a share, or just 13 percent of its net tangible asset value as of June 30.

($1=1.507 Australian Dollar)

(Reporting by Sonali Paul and James Regan; Editing by Lincoln Feast)