Guys, the senior lenders now are not the original ones who have debt 100cents in a dollar.
The senior lenders now are the hedge fund managers who bought the centro debt at huge discount. Without any calculation, I'm pretty sure that those hedge funds are taking a profit even though it seems like they made a good deal for centro holders for swaping negative equity of 2.51 for 100mil cash. For example,Commonwealth Bank of Australia in November sold A$110 million of Centro?s debt for about 56.5 cents in the dollar. Those hedge funds are definitely ripping centro holders off by taking advantage of the debt problem.
I'm not too sure what the directors are doing, but im sure we could squeeze a bit more cash out of those hedge funds. It's like a negotiation when you buy a car or a house, there is always room to move. Because, what i know is those hedge fund can't afford centro to go bankrupt either because centro is already in negative equity status and if centro go bankrupt, they won't get much back either.
So i reckon centro holders should together and reject the merge. 100mil cash split between ordinary holders and junior lenders is too minimal and simply not good enough. I will vote no as i know those big sharks simply have more stakes in this security than i do. I rather have nothing and let centro go bankrupt, 100mil cash will not leave the ordinary holders with much anyway. Those hedge funds want to get the deal done? Then raise the bid.
CNP Price at posting:
7.8¢ Sentiment: None Disclosure: Held
