investor confidence

It's obviously been a really long couple of weeks for Glenn and the crew and hopefully they are taking a hard-earned break for a day or so.

I just wanted to drop a few thoughts on what the company might do in the coming weeks for ailing shareholders.

Boards and CEOs have different approaches to their company share prices ranging from paranoid to ambivalent. If you have worked for a listed entity, you may well have experienced what this translates into.

When I was a young Swapette, I worked for a well known large financial institution who seemed to have laser-like focus on their SP. Part of this was due to the senior team having so many share options I guess. Part of it was pressure from their institutional share holders.

I also know of other companies who take the view that the market is irrational and a focus on running the business well and delivering good earnings will, in time, cause the SP to rise.

Anyway, onto Centro.

Until now, Glenn and the team have been fully focused on the debt extensions and negotiations with stakeholders. With this almost behind them, they are going to look at the priorities for the coming months. Asset sales, restructures, etc. will all be on the agenda but, believe me, so will the restoration of investor confidence.

Firstly, there is going to be pressure from the existing insto shareholders. We can safely assume that conversations between them and directors has already taken place, even informally. They are going to want to voice their opinion on where the direction should be and part of this is the value of their investment.

Secondly, if the company is evaluating equity injection options later in the year, these may include issuing more shares to an external investor. There is no way they would be able to do this without a recovery in the share price. Look how far we are away from the net-asset value.

Thirdly, like it or not, I am sure part of the remuneration structure for the senior team is either shares or options. That will be in the back of their mind when working out what to do.

Fourthly, they are not going to want CNP or CER kicked out of the ASX-200 list. There are various criteria for this, one of which is market cap.

Fifth and finally, unlike most companies, the asset value of the Centro group is partly dependant on the CNP and CER share price. Sounds strange? Well, don't forget that DPF and DPFI have shareholdings in both CNP and CER. This totals $40m across both funds, presumably down from around 10x this last year. CNP and the two DPFs between them own 51% of CER. The way this is accounted for is complex because of CRIT, but they key factor here is that if the group has a vested interest in a strong share price for valuation or disposal purposes.

In light of this, I am predicting we see some activities over the next few weeks specifically targeting investor confidence and indirectly, the share price. First up will probably be some more media interviews from the big fella Glenn. I think the company will also find an excuse to make another release or two to the ASX - maybe a roadmap presentation, or something that adds detail and fills in some of the blanks for us. It wouldn't surprise me either if they did some analyst briefings to try and sway some of the negative views.

Now, I am stating the bleedin' obvious when I say that today has been a disaster for the SP. The company is going to be aware of this and they have enough reasons, and now some spare time, to start focusing on restoring some confidence to investors.