Aussie blue-chip triggers sub-prime shockwave

The accounting practices of Australia’s second biggest shopping centre
operator Centro Properties
are being questioned after revelations a
PricewaterhouseCoopers audit
discovered the company failed to properly account for $A1.1bn (?476m) in debt.

While the Australian mortgage market has been largely untouched by the
subprime chaos, the Australian stock market was in turmoil this week when Centro
shares, popular among institutional shareholders, went into freefall after a
Centro announcement it was unable to refinance $3.9bn worth of debt, causing a
$A54bn stockmarket meltdown.

Centro’s failure to properly disclose the $A1.1bn may result in legal action
from Australia’s corporate regulator and the company could also be sued by
investors who bought stock in the company between the August 9 release of
Centro’s full-year accounts and September 18, when the correction of the
accounting error was reported to the Australian Stock Exchange.

Plaintiff law firms Maurice Blackburn Cashman and Slater & Gordon said
this week they were in talks with institutional shareholders to see if
litigation over lack of disclosure was viable, according to the Australian
national daily newspaper The Australian.

Further reading:

The credit crunch’s impact on year-ends

full story in The Australian

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