ALZ australand property group

actually, the risk is more on ALZ than AAZPB. AAZPB is a $200...

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    actually, the risk is more on ALZ than AAZPB. AAZPB is a $200 million issue so if ALZ choose to exchange because they (a) cannot pay out the note holders or (b) don't want to pay additional 2.5% per annum rate, they will need to issue $200 million worth of equity. If ALZ is say $1 in Sep08, this will be roughly 20% of market cap of company which would drag share price lower to say 80 cents. The only way out seems to be a refinancing at senior debt level which would be tough I guess. Come to think about, there are no bids on AAZPB. And equity has been sliding. Could be that market is very bearish on ALZ as a group because it sees refinancing risk as being significant. I don't know enough about ALZ underlying business to gauge what risks lie ahead. Any informed opinion welcome........
 
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