Centro flags more liabilities, shares tumble

By Victoria Thieberger

MELBOURNE (Reuters) - Centro Properties Group (CNP.AX), which owns 700 shopping malls in the United States and has proved a high-profile casualty of the global credit squeeze, warned on Tuesday that current liabilities could rise, sending its shares down by nearly half.

Centro also said in a statement it was seeking to extend a February 15 refinancing deadline and announced the resignation of its chief executive.

Centro and its affiliates are struggling to refinance some A$3.9 billion ($3.5 billion) of debt. It has put some assets up for sale.

The company, which had borrowed heavily to expand over the past two years, said U.S. holders of its notes, who are owed some $450 million, believed it may have been in default, though Centro did not concede that it was.

"The market is just upset that there are now issues potentially with the accounts. Also of concern is when you see the dreaded 'default' word. That is not taken well, although it seems to be still in dispute," said Richard Morris, investment manager at Constellation Capital Management.

Centro shares hit a low of A$0.445 after its comments, and by 0155 GMT were trading down 27 percent at A$0.63. The shares lost 80 percent of their value last month after Centro revealed its troubles, and had been as high as A$10.06 last May.

Shares in affiliate Centro Retail Trust (CER.AX) were down 33 percent at A$0.395.

Centro said there is a prospect that the proportion of current liabilities may have been higher than that reported in its end-June accounts.

Analysts estimate its debts at up to 70 percent of its equity capital. The company said on December 17 that its usual sources of funding had virtually closed down as a result of the illiquid credit market in the wake of the U.S. subprime mess, making it hard to refinance maturing short-term debt.

Credit problems also hit non-bank lender RAMS Home Loans Group Ltd (RHG.AX), which failed to refinance its loans last August and subsequently sold most of its business to Westpac banking Corp (WBC.AX).

SEEKING BUYERS

Centro is seeking buyers for some of its assets, including the Centro Australia Wholesale Fund and the Centro America Fund, or investors to take part in a rights issue to help boost its balance sheet.

The group said its adviser, Lazard Carnegie Wylie, had reported extensive interest in the group's assets from potential investors, and it expected a number of Australian and international parties to start due diligence shortly.

Constellation's Morris said there was not much detail in Tuesday's statement about the sale process, which may have disappointed investors.

"Everybody is waiting for more clarity about their strategic review, what asset sales are going to be required, and there was not a lot new there in that regard," he said.