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Centro Soars After Bank Bailout

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Australian investors seem to like Centro's deal with its lenders. It still ultimately means the company will likely be broken up. But now that process can proceed more orderly. That's probably good on all fronts. Forcing too many assets to be sold in today's market could end up depressing prices further. (And remember that Centro has more than 600 U.S. properties.) Extra time is a very good thing in this situation.

SECURITIES in Centro Properties soared yesterday after financiers extended its $5.05 billion debt deadline for a month and agreed on a long-term rescue plan that effectively gives them ownership.

But despite the surge on the back of the company's Tuesday night announcement, analysts say it is just a matter of time before the company is broken up and sold off piecemeal. The deal just gives the banks more time to do so.

"Surely it's a dead man walking," said one analyst.

"It is a bowl of spaghetti that needs to be unwound."

Centro Properties Group securities, which had been at 8.7c before a trading halt, shot up by more than 80 per cent at the start of trade yesterday, and finished 2c higher at 11c, up 26 per cent.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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