Centro and PwC to face off in court
THE latest twist in the saga to merge the embattled Centro Properties Group and Centro Retail Trust businesses will see the two pitted against former auditors Pricewaterhouse Coopers in court this morning, after a judge yesterday delayed giving the tie-up final approval.
THE latest twist in the saga to merge the embattled Centro Properties Group and Centro Retail Trust businesses will see the two pitted against former auditors Pricewaterhouse Coopers in court this morning, after a judge yesterday delayed giving the tie-up final approval.While Justice Ian Barrett in the NSW Supreme Court intended to rule in favour of Centro Properties Group (CPG) against the accounting firm he relented after long submissions from PwC, and ordered a stay of execution.CPG faces receivership if the merger paperwork is delayed and Centro fails to pay a key chunk of its huge debt by December 15. The tie-up of CPG and Centro Retail will give senior lenders control of the new Centro Retail Australia trust in exchange for forgiving the former's debt.Yesterday's legal stay of execution was granted to allow PwC a chance to read the court documents and lodge an appeal if necessary.In his judgment Justice Barrett said there was "in the cirumstances, no unfairness to PwC inherent in the schemes of arrangement".PwC, which is involved in a class action against the property group, has argued for some time that Centro improperly transferred $100 million, with almost half benefiting shareholders, at the expense of creditors.PWC claims the proposed merger with Centrol Retail Trust and the debt reduction plan, reduces the assets claimants could get access to over the long term.Justice Barrett has set a deadline of 11am today to approve the scheme of arrangement, after which Centro has an hour to lodge all necessary paperwork to the Australian Securities and Investments Commission, which will set the terms in motion."Upsetting of any or one element could be fatal to the whole plan," Justice Barrett said in delivering his ruling yesterday.Centro has $2.9 billion of debt maturing on December 15, and failure to win approval for the reorganisation plan would push the company into receivership, Centro Properties Group chairman Paul Cooper told security holders last week when they gave the merger the go-ahead.Centro's directors declined to comment on the court decision and will instead wait until today when they hope the court-approved schemes have been lodged.Lawyers for Centro argued that if the new Centro Retail Australia Trust is unable to start trading on December 15, that could also trigger debt defaults over other third party loans."The position we face is that PwC is only seeking this order in aid of a possible application to appeal and if this goes to the Court of Appeal this would undermine the merger," they stated.PwC's lawyers countered that there appeared to be no impediment in gaining an extension for these loans as well as the senior lender's outstanding loans.