cnp agrees stabilisation plan with financiers, page-10

The way I read this is that after conversion there will be essentially 9 times as many shares on issue. There will also be $1.05 Billion added to the net assets of Centro due to the conversion of debt to equity.

There were 891 million shares on issue at 30 June 2008 with a Net Tangible Asset Backing of 69 cents per share implying tangible asset of $618M.

After conversion the number of shares increases to approx 8 Billion and Net Asset would be $1.668 Billion. This would then give an NTA of 21 cents per unit.

Property values have definitely fallen since 30 June, so we should make an adjustment for this. A 15% fall in neighborhood shopping centers would be an optimistic view of recent events and as Centro has look through gearing of approx 75%, so this translates to a 60% fall in NTA. We are therefore left with Net Tangible Assets of approx 8.4 cents per unit.

The banks essentially own Centro now and are only keeping it running as having them dump hundreds of centers on the market would have flow on effects on their other clients.

So the question that needs to be asked is what is a share with an NTA of 8.4 cents that has no prospect of paying any distribution for many years worth? Answer: Not much.


The real winners out of the deals announced tonight are the banks, other fund managers and CER.