tuesday bridge club, page-4

I think the outcome for CNP is good considering the mess that the previous CEO and current directors are responsible for, the backdrop of the current global financial crisis and the sheer complexity of the group.

There was a very, very good chance that the outcome could have been administration but as I have said repeatedly, nobody who has a financial interest in the company would have benefited from this happening.

You might want to have a look at oversees companies such as Marconi and New Star Asset Management to see what can happen when shareholders are wiped out in a dilution. Look closer to home at AFG, ABS and others to see what happened when the directors threw in the towel and called in the administrators.

As an aside, this CNP outcome is sending a message to shareholders in other beleaguered, embattled, debt-laden high-profile victims of the worst financial crisis since Biblical times, that banks are prepared to reach a compromise if value still exists. Over coming days, I would look for strength in companies who find themselves in a similar Centro-esque position, such as BNB and satellites.

At this stage, some other posters have had a stab at the per share NTA remaining in CNP after being diluted. I haven't done the numbers yet, but they are probably close. Remember though that we are at or approaching the bottom of one of the worst downturns in history. There will need to be revals on commercial property for the coming halves, maybe longer, but this is a multi-year plan for CNP which is intended to take CNP into the next cyclical upturn.

There are some outstanding questions, such as what the new interest rates will be, so I hope we get further colour in the coming days.

The biggest issue now is sentiment. I doubt the media will highlight the fact that a major organisation and their employees, customers and shareholders have been saved from a tragic collapse or that shareholders still have value left in the company. They will of course focus on the downside, which will probably involve shareholder dilution and the amount of value that has been destroyed in the last year. They will also go to great lengths to highlight the '1 month' extension (pre-paperwork) as this then guarantees that people will continue to buy the papers to see what is happening in the interim.

Anyone think Michael West will come out with a retraction of his now legendary "She's a gonna!" opinion of the company?

Me neither.

I would say a number of journos, Mr West in particular, look a bit stoopid right about now. Unfortunately people have very short memories, journos have very thick skins and the corporate world continues to supply the media with plenty of ammunition...

Oh.. and good news will never sell newspapers.