A quick analysis to see what dilution share holders can expect after recapitalisation...
Lets say that Centro finds a cornerstone investor who is willing to inject cash in return for new shares.
Centro needs to payoff/rollover 4.2bil worth of expiring debt. Lets assume that the cornerstone investor pays off the full amount (The more likely scenario is that Centro will sell some assets, gets some cash injection and rollover the rest of the debt, so the dilution would be even better for existing share holders).
In return for the 4.2bil cash injection, management will issue new shares. Considering that Centro's NTA is $1.31 and $2.68 when intangigles are included, I would expect that the lowest value management will accept is to issue 1 new share for every $1.31 cash injected. This means 4.2bil/1.31 = 3.2bil new shares. There are currently 845mil shares so the total No shares will be 4.045bil.
Operating profit was $186mil for 6 months or $372mil for full year, which works out to be 372/4045 = $0.092 per (new) shares. Note that the actual profit post recapitalisation will be higher since there will be less interest repayments after the cash injection.
Of course after payment the debt, Centro's problem will be gone and its SP will go back to more reasonable levels. Say at PE of 10 you can expect a (new) share price of 92c. That's nearly 3 times the current share price.
As mentioned earlier the more likely scenario of asset sale/cash/rollover will be even better for share holders. Also the figure $1.31 for every new share is very conservative. The corner stone investor will be getting $1.37 of intangibles for free per share.
CNP Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
