Centro sells US shopping malls for $9.4 billion

SYDNEY (AP) -- Struggling shopping mall operator Centro Properties Group said Tuesday it has agreed to sell its 588 U.S. malls to New York-based Blackstone Group LP in a deal valued at $9.4 billion.

The acquisition is Blackstone's largest since its $20.1 billion takeover of Hilton Hotels Corp. in 2007 and shows faith that the weak U.S. retail market will improve.

Centro, which is weighed down by massive debt, also announced a plan to pay off its creditors by giving them ownership of most of its Australian shopping malls.

Ordinary shareholders and lower-ranked creditors would be left with about $100 million.

"We have previously said that the capital structure of Centro is unsustainable in its current form," Centro chairman Paul Cooper said in a statement.

The deal, if approved, "will return Centro to a positive equity position and potentially allow Centro to return some value to its stakeholders," he said.

Centro, based in Melbourne, Australia, said the $9.4 billion sale price was a 1.3 percent discount to the book value of the malls at Dec. 31.

Centro said it was also in discussions with Centro Retail Group, Centro Australia Wholesale Fund, Direct Property Fund and other Centro syndicates to create a single portfolio of Australian shopping malls once the U.S. assets sale was complete.

The cancellation of Centro's debts is contingent on lenders accepting the amalgamation of the Australian funds plus stakeholder approvals once the transaction structure is finalized.

Securities of Centro Properties were down 10 percent on the Australian stock exchange.

(This version CORRECTS that Blackstone is based in New York, not Colorado.)

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