I might be missing something here, but how is it that shareholders can lose out here with price as is?
Consider the worst case scenario:
Tangible Assets at 31/12/08 were $7.444B. Total liabilities were $5.591B. So, as at 31/12/08, tangible net assets were $1.853B.
Lets say that the banks lose faith at 30 April due to Centro's inability to either negotiate refinance extension or repay debt. They appoint an administrator. The administrator then decides to put the company into liquidation.
Lets say that all the tangible assets are sold at 80% of their value (considering quality of property assets, this would be a fairly low fire sale realisation). That gives an asset position of $5.955 billion. Payout the all the liabilities first (regardless of whether they are secured or not) and you get left over assets of $364 million.
Total shares are 845,116,000. Consequently, shareholders would be paid out $0.43 per share. Yet the share price trades even lower in this worst case scenario!
Things must be REALLY bad for the share price to be this low. I see big problems, but nothing than cannot be overcome. At the end of the day, the company is running at an operating profit. It just needs to downsize a bit.
Am I wrong???
CNP Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
