Centro free to merge as PwC drops appeal

CENTRO PROPERTIES will move to its next phase of being a debt-free, simply-structured retail landlord, after the accountants PricewaterhouseCoopers withdrew a legal threat to block a merger with its sister retail trust.

By InvestSMART · 3 Dec 2011

By InvestSMART ·
3 Dec 2011

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Following nearly four years of battling to stay alive, Centro was given the green light to move ahead after PwC backed down from appealing the NSW Supreme Court's decision on the deal with Centro Retail Trust.

Centro's shares were suspended from trade yesterday morning for one last time. On Monday, the fund will list on the ASX on a deferred delivery basis, and from December 15, it will be reborn as the new $3.4 billion Centro Retail Australia.

After gaining the court's approval on Thursday, PwC called for a stay of execution to read the judgment and decide whether to appeal. That was granted by Justice Ian Barrett.

But at the 11th hour it pulled out of the action.

PwC forced the court action after it objected to the Centro scheme, which included a payment of $49.8 million to Centro equityholders, but left only $10 million for significant contingent liabilities arising from the class action.

The chief executive of Centro, Robert Tsenin, told a media briefing he was delighted with the outcome and it was time to put the past behind the group.

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Frequently Asked Questions about this Article…

What happened between Centro and PwC that affects Centro's merger?

PricewaterhouseCoopers (PwC) withdrew a legal appeal that had been threatening to block Centro's merger with its sister fund, Centro Retail Trust. With PwC pulling out, Centro was cleared to proceed with the deal approved by the NSW Supreme Court.

Why did PwC object to the Centro merger in the first place?

PwC forced the court action because it objected to aspects of the Centro scheme, notably that the plan included a $49.8 million payment to Centro equityholders while leaving only $10 million to cover significant contingent liabilities arising from a class action.

When will Centro's shares resume trading and when will the new entity be formed?

Centro's shares were suspended for a final time and, according to the article, the fund will list on the ASX on a deferred delivery basis on the following Monday. From December 15 it will be reborn as the new $3.4 billion Centro Retail Australia.

What does Centro mean by becoming a "debt-free, simply-structured retail landlord"?

According to the article, Centro plans to move into its next phase as a debt-free, simply-structured retail landlord after the merger. That describes the group's intended financial and organizational position following the deal, as stated by Centro in the report.

What court actions took place during the merger approval process?

The NSW Supreme Court approved the scheme. After that approval, PwC sought a stay of execution to read the judgment and decide on an appeal; Justice Ian Barrett granted that stay. Ultimately PwC withdrew and did not pursue the appeal, allowing the merger to proceed.

How did Centro's management react to the outcome of the legal dispute?

Centro's chief executive, Robert Tsenin, said he was delighted with the outcome and indicated it was time to put the past behind the group, according to the article.

What are the key financial figures mentioned about the Centro deal?

The article notes a $49.8 million payment to Centro equityholders under the scheme, a $10 million allocation for contingent liabilities from a class action, and that the merged entity will be the new $3.4 billion Centro Retail Australia.

What does the PwC withdrawal mean for everyday investors in Centro?

With PwC withdrawing its appeal, the legal obstacle to the merger has been removed, allowing Centro to proceed with its deferred ASX listing and the planned transformation into the $3.4 billion Centro Retail Australia on the stated dates, according to the article.