Bloomberg News

Centro Wins Dismissal of Suit to Block Sale to Blackstone

June 21, 2011

(Updates with judge’s comment in third paragraph.)

June 21 (Bloomberg) -- Centro Properties Group won the dismissal of a shareholder lawsuit which sought to block a $9.4 billion sale of its U.S. malls to a unit of Blackstone Group LP, allowing the transaction to be completed by June 30.

Smartec Capital Pty, which owns less than 0.5 percent of Centro’s outstanding shares, sued in Sydney federal court claiming the Melbourne-based company needed shareholder approval for the transaction to proceed. Federal Court Judge Margaret Stone threw out the lawsuit today without a hearing.

The plaintiff’s lack of “prospects for success are such that the proceedings should be summarily dismissed,” Stone said in court.

Blackstone Real Estate Partners VI LP, a unit of the world’s biggest private-equity firm, agreed to buy Centro’s 588 U.S. malls in March. Centro is selling assets to pay debt that totaled A$16 billion ($17 billion) as of Dec. 31, according to its financial statements. The shopping-mall manager said on March 1 it also agreed to swap part of its debt for 108 Australian properties and will be left with about A$100 million to distribute to shareholders when the deals are concluded.

Smartec claimed Centro violated Australian rules for listed companies by not seeking shareholder approval for the U.S. sale. The investor sought to overturn a ruling by the Australian Securities Exchange, which found that approval wasn’t needed because Centro’s U.S. assets didn’t make up its main business.

Centro fell 8.7 percent to 4.2 Australian cents as of 1:21 p.m. on the Australian Stock Exchange.

Smartec sued the wrong party, Centro’s lawyer Ian Jackman told the judge today.

“We don’t have anything to do with the transfer of the properties,” Jackman said. The U.S. assets are owned by subsidiaries and companies unrelated to Centro, he said.

He urged the judge to throw out the lawsuit, calling it “utterly futile” and “just silly.” Allowing the process to go forward would create uncertainty for the buyers and sellers, Jackman said.

The case is: Smartec Capital Pty Ltd. v. Centro Properties Ltd. NSD913/2011. Federal Court of Australia (Sydney).

--Editors: Lena Lee, Terje Langeland

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net


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