broker report, page-6

Hope,

No, that is not the case at all.

It may be worth going back to the 1/2yr presentation webcast available on the Centro web site. You will hear that the major thing weighing CER down in the debt associated with the Super LLC joint venture with CNP.

The company has confirmed that the CER portion of the debt is 'ringfenced' and the maximum that CER can lose on this is (from memory) 67c per share on a NTA of $1.65.

Now I appreciate that not everyone agrees that CER actually has a 'real' NTA of $1.65 because the majority of assets are in the US where there is a weakening of prices.

However, for a value investor, this comes down to safety margin. On the current NTA of $1.65, in the (unlikely) event that Super LLC falls over, NTA will drop to about $1. Even if we then take a knife to the CER balance sheet, there is still a considerable safety margin against the existing SP of 44c.

CER could quite happily be decoupled from CNP and would survive as a stand-alone entity. Because CNP have direct and indirect interest in 51% of CER, there is no chance of a takeover at this stage. If things were to change, CNP could sell the holding in which case my view is that CER would be taken over in full by the purchaser, who would probably be US-based.