letter from centro re: capitalisation..., page-14

re: letter from centro capitalisation... Very bullish in my opinion.

The facts that have emerged from Uncle in the last few days are (some of this cut out of my prev posting):

1. We have had offers for CAWF and CAF and the board is considering them. We now think there may be more value in selling individual properties and we're looking into that too.

2. "Mr. Rufrano said it was unlikely that Centro wouldn't be granted an extension." (WSJ)

Which I think is one of the best indications of an Australian bank debt extension we have heard from the company to-date.

3. "The reason we can do this is because we've been given good support from our banks to not force us to make a deal" to sell properties or equity at detrimental prices." (WSJ)

We long thought that the banks may be forcing Centro to make a deal to get the loans paid back without regard for the shareholders. This does not now appear to be the case. It also suggests we may not see a sale of CAF or CAWF in the short term, which is great news for earnings and decoupling the complex ownership.


In summary:
We KNOW Centro has quality assets and despite the crunch, there has been interest in purchasing them. Listen to the Q&A session from the 1/2 year results - Jeremy Mead said that they have had hundreds of phone calls for individual properties and could "sell them within a week". (At the time they didn't want to though). The banks are not forcing a sale and they are likely to give an extension.

Seems all good to me.

Ooh, gotta go, I think my buy order just got filled.