Struggling shopping centre owner Centro Properties Group (CNP) suffered yet another blow late yesterday afternoon when UBS revealed that it had sold off more of its few remaining shares in the company
The investment banking company has reduced its stake to 5.26%, from 8.63% in late December.
Most of the UBS' shares in Centro were offloaded by its asset management unit, a sign that it has lost confidence in the company's recovery prospects.
The market didn't let the decision slide, with shares in Centro falling by more than 15% at one stage yesterday, before easing to close down by 6.61% at $1.20.
The latest sell-down by UBS follows an earlier sale of 2.31%, revealed last Friday.
UBS optimistically bought stock in the company even as it was melting down, snapping up stock valued at about $12 million on December 19, two days after Centro revealed its financial black hole.
On December 17 Centro CEO Andrew Scott revealed that the company was struggling to refinance $3.9 billion in debt following its confident expansion into the US.
The news brought wrath upon the group with a share price loss of more than 80%, destroying billions of dollars of shareholder wealth.
Despite the heavy losses, UBS bought shares in the ailing company, with the belief that that the price collapse did not reflect the latest book value of Centro's properties of $2.29 a share.
However, even after a three-day jump in the share price last week, Centro again closed lower yesterday, falling 8.5c to $1.20 – still significantly below that book value.
Stuart Barton, spokesman for UBS, tried defend the company's poor buy decision yesterday: "On a risk-weighted basis the stock was worth buying."
"But as the price rebounded and the risk was continually assessed, it was prudent to partially sell down the position."
Now the onus is on Centro to prove to its bankers that it can refinance the $3.9 billion in debt by a very soon February 15 deadline.
Despite a loss of 1.25% this morning, Centro managed to recover slightly by 1:00PM AEST for a 0.45% or 0.5 cent gain at $1.205.
