who has the better deal, page-2

Hey Guys, Firstly i think the main thing here is both cer and cnp have lender support.In the current environment i believe the banks will continue to support both entities as administration is not a viable option moving forward.If this were the case then still; assets sales will remain difficult given the current environment,hence better for both cer and cnp to get over this difficult period until property markets starts to gain momentum again i.e. revals marked up,U.S economy starts to bottom out,unemployment drops,strong gdp and trade balance numbers,Banks to start trusting and lending to each other again as well as financing projects for larger companies as the biggest threat hanging over businesses is cashflow. If companies cannot get their hands on the cash and credit they need to go about their day-to-day business, there is a real risk that we could see healthy firms going under in Australia.

Now as many are aware that management didn't give any guidance for dividends to cer holders.This doesn't mean that dividends won't be payed.My guess is there should be more input in the next few weeks to months and still believe their might be a chance of 1.5 cents for August or what ever the taxable income might be for cer given the tax implications involved for being a trust as 1.5 cents last year was the taxable income for the trust where cnp used their share of the dividend to service debt and keep in mind that the taxable income of a trust should be payed out to shareholders or risk being charged at the higher rate of 46.5%.I agree with the logic in retaining cash and paying off outstanding debt and this is a more prudent approach to running the business over the longer term but i guess cnp holders might be in strife as dividends is out of the question for quite a while as this was mentioned in the announcement.

Generally speaking cer needs the aussie dollar to reach about 83-84 cents and the mark to market value of the hedges would be approximately = zero.But so many unknown factors are surrounding the different hedges and i guess the half yearly report due in 6 weeks time should answer most of the questions, but keep in mind forex markets will still remain volatile as they always do so i guess in time the aussie dollar should get back to the 83-84 cent range as the Australian economy has been more resilient than most advanced economies around the world i.e. U.S being one of them.

So i believe in the foreseeable future that debt will continue to get rolled over and with the announcement on friday noting cnp dilution and cer not issuing any securites as part of its debt stabilisation; this should be a big positive for cer over cnp.


So what do we need now?

I guess the answer is >>psychology related and what we need on our tv sets ,newspapers and radios today are commentators and journalists right around the world to bring forth a positive approach and some common sense solutions to tackle some of the issues that the leading nations around the world are faced with and to re-inforce the positive messages about the world economy and comparing this with history rather than commentators preaching the same doom and gloom message everyday which is rather monotonous and really not helping the world economy move forward.

We need these people to focus on "Positives" and this will be a start to the world turnaround as investors/traders like to follow the herd mentality and the herd needs to speak "Positively" about the future of Australia,China,U.S, India, Germany e.t.c..

We know that we are currently in a downturn but lets do something about it rather than the same message day in day out in the papers on the tv and radio by the same commentators.Things will be better and we need to fill our minds with positive mental images about Australia,U.S and the rest of the world and psychologically this is where it really starts.This might be very hard for one; as the junk in their mind (i.e. media related) needs to be flushed out and reset.

Anyhow i'm now "Fully Focused" on the half yearly results which are due late February this year as this will give us more indication as to the current financial status of cer.I think alot of investors will be comparing cer and cnp and understand that as a value investor cer remains the better option.


cheers