cer question, page-4

Hi Seanmorr,

I posted the below on Saturday.



With regards to the whole dividend issue, I believe the following are reasons why CER will announce a dividend policy on or just after 15 January 2009:

- CER have stressed on numerous occasions since 15 Dec 07 (the day Super LLC debt wasnt above to be refinanced) that CER's goal would be to have a sustainable dividend policy in place once the SuperLLC debt issues were resolved. 15 Jan looks like that date.

- CER is a trust and will be taxed heavily if they dont make a distribution at the very least from their taxable income. Read their constitution from August 2005.

- CNP will have hybrid securities issued over them, which look to extend out to 7 years. Refer to last month's ann. In order for CER to service the hybrids, CNP will require as much money as possible flowing into them. CNP is a 51% shareholder in CER. Without dividend income flowing from CER to CNP, CNP would struggle to service the hybrids. I'd say distributable income will come in around $165m or 7.2c (refer to 1st post on this thread). CNP need as much of their 51% in the distributable income as possible. The banks will demand this.

CNP is not a class A shareholder in CER. Its rights to CER's distributable income are the same as you or I. This will not change.

- CER's gearing is lower than CNP. CER's NTA as discussed on another thread will be fairly comfortable also.

I'd say these are the main reasons. There are others.