Of course CNPs growth plan was flawed. And our friend Scott knew it as did a number of others who helped the slow decline of CNP from $10 down to sub $6 before the inevitable hit the fan.
Hindsight or not, any organisation that acquires property at the top of a cycle with borrowed money is going to suffer the consequences. The gearing ratio of CNP was unheard of in previous eras and this whole lending mentality over a period of time is what created our current situation (in simplistic terms). Anyone, can borrow money and make something seem successful, especially in bullish times. The business people who stand the test of time are those who build something out of nothing and maintain a strategy that relies on the business model rather than the amount of borrowings.
Off course when the going got tough, Mr Scott was nowhere to be seen, preferring to flee with his golden handshake, and getting off as per usual 'scott' free.
I never had any time for the CNPs and the ABCs of this world, well before their little utopias broke down and that is not hindsight, that is a genuine disliking of companies who over-borrow to try to succeed via shortcuts rather than suceed the tried and proven way.
CNP was always a flawed plan, if it wasn't they wouldnt have ended up in the predicament they are in.
Credit where credit is due, I think Rufruano (spelling?) has done a great job against the odds. I frankly was sceptical about whether he could get CNP through to where it is now.
CER Price at posting:
7.6¢ Sentiment: None Disclosure: Held
