Archive for December 18th, 2008

Centro Soars After Bank Bailout

by David Bodamer December 18th, 2008

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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Circuit City Lease Auction Canceled

by David Bodamer December 18th, 2008

This is somewhat ominous news on the excess space front. Circuit City was planning on auctioning 155 leases today, but decided to cancel the auction because of a lack of bidders. Circuit City instead plans to simply break the leases meaning that overall it will break 304 leases.

This raises some interesting questions. Is the excess space market becoming saturated? Is there something about Circuit City’s leases that made them less attractive than others? For example, were they paying higher rates than other big box tenants? Would a landlord rather have Circuit City reject the lease and get it back or have it resolved in an auction where you might not be able to control who comes in and takes over the space?

Bankrupt electronics chain Circuit City Stores Inc. did not receive enough bids on leases for stores it plans to shutter, forcing it to cancel an auction set for Thursday, a company spokesman said on Wednesday.

Circuit City, the second-largest U.S. electronics retailer, is in the process of liquidating merchandise at 155 stores in 55 markets and plans to conclude those sales by the end of the month, Circuit City spokesman Bill Cimino said in an email.

The chain had received permission from the U.S. bankruptcy court to auction the leases for all but one of those stores.

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General Growth Extension Comes Through

by David Bodamer December 18th, 2008

It took almost a week, but General Growth got an extension on its $900 million loan until February.

U.S. mall giant General Growth Properties Inc. said its syndicate of lenders for a $900 million loan has agreed to extend the payment deadline till Feb. 12, 2009.

Last week, all the lenders had agreed to extend the deadline except for Citibank, which held out on the extension for the loan, originally due Nov. 28, on two Las Vegas malls — Fashion Show and Shoppes at the Palazzo.

The loan extension comes after six of the banks used pressure tactics on Citigroup Inc on Wednesday, to get it to agree to an extension, according to a Wall Street Journal report.

On Wednesday, the six lenders had threatened an end run to get Citigroup’s cooperation, and said if an extension was not approved, they would not agree to declare the loan due, giving General Growth a de facto extension, the paper said citing people familiar with the talks.

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