The decision by two key Centro Properties Group executives not to renew their contracts is an indication of how steep the problems still are at the embattled shopping centre owner, according to an investment expert.
Centro yesterday said it had begun searching for a new global chief executive after Glenn Rufrano decided not to renew his contract when it expires in February 2010.
Additionally, Centro Australia chief executive Tony Clarke told the board he is a candidate for the global role and also did not wish to continue beyond his current contract term, which expires at the same time.
International director and executive search firm Egon Zehnder, the same group appointed to search for BT Investment Management's new chief executive, will identify candidates for Centro.
"Whilst there's no obvious indication as to why the two directors have decided not to renew their contracts, it may be taken by some market observers that the challenge of turning this company around is a significant one," Lincoln Indicators chief executive and analyst Elio D'Amato said.
"Therefore, it may be of help to appoint someone with a fresh drive and a willingness to take on the hard job of turning Centro out of the quagmire it's in."
Lincoln rates the stock as being exposed to much higher than acceptable levels of financial risk, but D'Amato said the company could one day turn around.
"Every disaster is salvageable and Centro's ability to succeed will depend on whether it can provide a solid value proposition, successfully sell down assets and repay its debts to creditors," he said.
The stablisation Centro achieved under Rufrano's leadership is a strong foundation for the company going forward, Centro chairman Paul Cooper said.
"With this in mind, the board has commenced the search for an Australia-based global chief executive with a minimum contract term of three years," he said.
The company last month said the total decline in property valuations within its managed property portfolio was $2.62 billion for the six months to 30 June 2009.
