monday sp, page-3

the sad truth of the matter is they have >1 billion of debt coming up end /beginning of 08/09 & their strategy to mitigate that is to actually sell off stella & improve their loan vs valuation aka recepitalise. management however probably does not believe that given the current trading environment; they will be able to refinance that loan....hence the stella offer & group breakup. everyone is worried about the 150mil but really it is more the >1bil debt that is coming up that is more of a scare. centro could not get immediate refinance of 1.3bil.....& it has better assets than mfs has.....think about it. rem centro's assets are recession proof & mfs is not; if anything a recession can reall hurt mfs's assets.

so question is why april? why now? well they can't do it later in the year as investos will be more noteful of the huge debt occured & it will be difficult to get it off the ground hence it should be ideally tied up in the 1st half of the year. Now what happens if they can get it off the ground i.e. sell stella & the debt comes up for refinancing towards the end of the year; boom & bust. unlike centro most of msf's debt is held by ubs & not a domestic bank.

one last thing that i remembered picking up somewhere previously; mfs is actually negatively capitalised atm while stella is positively capitalised.....i.e. mfs has more debt than assets on it's books...stella the other way round.....the only reason why a company would do that is to make stella look good to be able to sell it. something that mfs has been trying to do for sometime now.....

as always dyor....