I know we're all getting tired of CNP posts - but hey it's about money so read on folks...
BROKERS believe Centro Property Group will ride out its credit crunch woes and that its securities could rebound to within the $2 range.
The nation's second largest owner of shopping centres went into a tailspin midway through December when it was unable to refinance about $1.3 billion of maturing debt.
The company was nearly annihilated by investors, losing more than four-fifths of its market capitalisation.
Since then, Centro securities have stabilised around the $1 - $1.10 range and yesterday, it announced it had received unsolicited approaches form parties wishing to invest in the group or buy up some of its assets.
In response, Centro said it was open to offers that maximised the interests of its security holders. Aequs Securities institutional dealer Ric Klusman said there was now a lot of chatter in the market about either financial institutions or rival shopping centre operators buying in.
"The rumour is that they are talking to Westfield,'' Mr Klusman said.
"Westfield sold them a lot of assets and whether Westfield wants to buy them back or not, I think they will now ride through this, this is different to the RAMS situation.''
At 1.36PM (AEDT) Centro Securities were up 6.5 cents, or 5.77 per cent, to $1.10 in a broadly weaker market.
That was fuelled partly by media reports that US hedge funds Blackstone and Citadel had flown teams to Australia to participate in the Centro sale.
Mr Klusman said he would be surprised if Centro's advisers, Lazard Carnegie Wylie, hadn't attracted the interest of such global finance giants.
"I think it's an opportunity for someone to raid them and my gut feeling is you're going to get a bid and the buyers are positioning to get themselves a good deal,'' he said.
"Carnegie Wylie are very professional advisers and I would think they'd be naturally talking to all these people as a matter of course.''
He also pointed to the huge volume of trade in Centro securities and said it would not be difficult for a potential suitor to quietly build up a significant stake in the company.
"About 10 cent of the company was traded yesterday, and if you went in gently over a week and soaked up 10 per cent and then said you'd lend them the money needed to cover the financing problems, you'd be pretty well placed,'' he said.
Mr Klusman predicted the stock will "go back to $2''.
DISCLOSURE: I bought 10k at 1.41 so I'm about the only fool here that is actually on a loss after the SP demise... My personal SP target is $3.50 - $4.00 and I'm hoping that Centro manages to refinance without selling any significant assetts...
CNP Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
