cats ann is a disgrace. we must take action

Hi All,

Sorry for my belated response to the CATS announcement but better late than never and the settlement has yet to be given the all clear by the Federal Court.

What I don’t understand is since when did CRF become liable for the debts of CNP? CRF is a quadrupled stapled entity and has nothing to do with CNP. Refer to ASX circular announcement

http://asx.com.au/asxpdf/20111202/pdf/42314zsz3c163v.pdf

As a result of the recapitalisation, CNP became a shell company and changed its name to CNPR. Secured creditors agreed for $100M to be left behind to CNP of which $10M was to be used for contingent liabilities.

Now if CNPR is a separate legal entity with $10M of assets, why would CER which recapitalised itself into CRF, be liable for any shortfall of debts owing by another entity.

It makes a mockery of PWC trying so hard to get the recapitalisation rejected by the court last year. Their primary opposition to the recapitalisation was that insufficient monies were being put aside for contingent creditors. PWC was also taking action against Centro. If CRF was going to be liable for the class action anyway, why would PWC have tried to get more than $10M put aside by CNP?

As can be noted by the recent settlement announcement, it made no difference that $10M was put aside:

http://imagesignal.comsec.com.au/docserver/01296234.pdf fileid=01296234&datedir=20120510&edt=MjAxMi0wNS0yNysyMDoyN o1OSsxMjArMCtjb21zZWMrcmVkaXJlY3QrL2ltYWdlc2lnbmFsL2Vycm9y GFnZXMvUERGVGltZW91dC5odG1sKy9pbWFnZXNpZ25hbC9lcnJvcnBhZ2V L3BkZmRlbGF5ZWQuanNw

Centro Retail Australia will contribute $85 million to a total settlement amount in respect of all proceedings of $200 million, which amount will be allocated between the Maurice Blackburn and Slater & Gordon claims. The balance of the total settlement amount will be comprised of:
•$67 million from PwC;
•$10 million from CNPR; and
•$38 million from available insurance proceeds

Whilst I can understand CNP secured creditors be compensated for the class action liability against CER, which ultimately affects the CRF bottom line, which CNP secured creditors are now shareholders of, why should they be compensated for the class action liability that CNP is required to pay?

As former CER holders, we have just as much right to be awarded compensation (CATS) for any class action liability, which relates to CNP. As I have stated, I don’t believe CRF should have to incur any CNP liability as the $10M is being held within CNPR for the purposes of the class action but even assuming this doesn’t hold up, we deserve compensation for something that we have nothing to be liable for.

CNP’s class action would have been far larger than CER’s given CNP’s market cap fell much more in % terms and $ value than CER so it would have demanded much more compensation.

Of the $200M awarded in favour of the claimants, how much is paid to former CNP holders and how much to CER holders? Even if the split is 50/50, the CNP holders should be scrapping it over the $10M allocated to them and not obtaining further recourse from CRF.

Had we known that CRF would be taking on CNP’s class action liabilities prior to the recapitalisation, I would have been heavily vocal in opposing it and letting CNP die, meaning class action claimants would have received nothing as contingent creditors are very low down in the pecking order in an administration/receivership.


In the announcement on improved aggregation terms on 19 November 2011, page 5 the following is mentioned:

http://asx.com.au/asxpdf/20111118/pdf/422mzyf6g3ft2q.pdf

“As explained in the Disclosure Document (section 10.6.3), the potential liability arising from the CER Class Action Litigation is not known. The Cap is not an estimate of potential liability and the Cap may be more or less than the aggregate liability (if any) that might be realised as a result of the CER Class Action Litigation. As a result, there is no assurance that the CATS will compensate their holders for all liability that might arise as a result of the CER Class Action Litigation.”

It did not say anything about CRF taking on CNP’s class action also. As I said, if we had known this I would have opposed the recapitalisation. I’m sure many others would have also.

I am disgusted with the settlement announcement. We must take this further. What is everyone’s thoughts on this?

CER has been stooged one too many times. As you can see there are quite a few issues involved here. This time, they have taken it too far.

Cheers