The company, which has borrowed heavily in an aggressive expansion over the past two years, said U.S. holders of its notes, who are owed some $450 million, believed it may have been in default, though it did not concede that it was.
"The market is just upset that there are now issues potentially with the accounts. Also of concern is when you see the dreaded 'default' word. That is not taken well, although it seems to be still in dispute," said Richard Morris, investment manager at Constellation Capital Management.
Centro shares dropped as much as 48 percent but finished the session down 30 percent at A$0.60. The shares lost 80 percent of their value last month after Centro revealed its troubles, and had been as high as A$10.06 last May.
Centro said there is a prospect that the proportion of current liabilities may have been higher than that reported in its end-June accounts.
Analysts estimate its debts at up to 70 percent of its equity capital. The company said on Dec. 17 that its usual sources of funding had virtually closed down as a result of illiquid credit markets in the wake of the U.S. subprime mess, making it hard to refinance maturing short-term debt.
Analysts said it was in the banks' interests to extend the refinancing deadline, perhaps by a month, to help avoid a fire sale of assets.
Credit problems also hit Australian non-bank lender RAMS Home Loans Group, which failed to refinance its loans last August and subsequently sold most of its business to Westpac Banking Corp.
Centro said Chief Executive Andrew Scott resigned and would be replaced immediately by Glenn Rufrano, previously the chief of U.S. property group New Plan, bought by Centro last year.
Scott told Reuters he stepped aside "for Centro's good as well as my own", but he would stay on as a consultant. "For the sake of the market, shareholder and public perceptions, it would
not be appropriate for me to continue in the (CEO) role," he said in a telephone interview.
Centro is seeking buyers for some of its assets, including the Centro Australia Wholesale Fund and the Centro America Fund, or investors to take part in a rights issue to help boost its balance sheet.
The group said its adviser, Lazard Carnegie Wylie, had reported extensive interest from potential investors, and it expected a number of Australian and international parties to start due diligence soon.
A Sydney-based fund manager who asked not to be identified said quality malls rarely come on the market and local and U.S. industry players were keen to cherry-pick Centro's best assets.
"If you look at professional outfits like Westfield or Stockland, they would know each of Centro's quality assets backwards, probably better than Centro themselves. The same applies for the key competitors in the U.S.," he said.
About two-thirds of Centro's shopping centers are in the United States, with the remainder in Australia and New Zealand. It holds the assets through a complex network of managed funds.
Media reports have said hedge fund Citadel Investment Group and Blackstone Group in the U.S., and Australian firms including Westfield Group, AMP and Colonial First State may be potential buyers.
Constellation's Morris said there was little detail in Tuesday's statement about the sale process, which may have disappointed investors. "Everybody is waiting for more clarity about their strategic review, what asset sales are going to be required, and there was not a lot new there in that regard," he said.