banks hold key to cnp

Whilst there is a pun in the headline, I think we need to understand where CNP is currently at:
1. Analysis of asset position & cashflow is largely immaterial in the current situation, because while these figures may still be positive, the banks are in effective control after last refinancing extension.
2. The current recession probably will not be deflationary nor deep, but will be associated with higher inflation.
3. Interest rates,currency movements & retail figures all seem to be favouring CNP going forward.
4. Banks are currently happy with the way CNP management & staff are looking after the assets.
5. No one can tell whether any extensions will be granted because this is a group decision that requires all lenders to be in agreement. The Septmber 30th deadline will be the easier decision because smaller group of lenders involved & this group were prepared initially to give longer extension earlier in year.
6. December 15th extension is the big decision. Will all banks agree to maintaining current status or will some want out? Australian banks probably want to not move for receivership because they know asset values would be affected & their own bank share prices would suffer at the hands of the market.
7. The recent non sale decision would have effectively been the banks saying the price was too low. This may imply the banks are in no rush to deal with the assets.
8. If we assume an extension is forthcoming in December (could be a BIG IF), the banks will be looking to further secure their position over the assets. Given the announcement in August we could be looking at some form of Hybrid security. We can only guess what form this may take but we would have to assume there will be some dilution of current shareholders equity. Remember banks aren't interested in CNP nor its staff,or its shareholders, they are only interested in their loans. Given banks balance sheets have suffered recently it may be banks become greedy about how much of the upside they want out of CNP going forward.
9. One of the key questions facing current shareholders is how greedy will the banks be at the expense of ordinary shareholders going forward?
Conclusion: No one can give the answer to whether CNP will survive because its a group of bankers that must decide CNP fate. Secondly, whilst there is a real possiblity CNP will survive, we can't be certain in what form this will take & how much current shareholders will retain of equity. Current share price is only reflecting an uncertain future. Given this situation shareholders can expect sharp price movements either way.
This post was mainly for current shareholders & is not meant as advice in anyway, so please weight up the facts & make an appropriate investment decision that fits your personal investment needs.
Regards
Buffett
PS This post just reflects my personal views, neither positive nor negative, hopefully just the reality.