This is how the Earnings per Share (EPS) impact the proposed...

This is how the Earnings per Share (EPS) impact the proposed payout of shares vs cash will affect us:


Shares:

Number of shares to increase from 1.341B to 1.427B

Approximately a 6.4% increase

Page 6 of following announcement forecast a revised 15.1c EPS for FY11-12

http://www.cerinvestor.com.au/uploads//company-and-asx-announcements/2011/CER_-_Supplementary_EM_and_Disclosure_Document_4_Nov_2011.pdf

We’ll use 15.1c as the basis of comparison.

A 6.4% increase in shares dilutes the EPS to 14.2c, this is a decrease in our EPS of 0.9c


Cash:

Let’s assume a cash payment of $85M.

Assuming that the cost of debt is approximately the same as announced in the debt supplemental on 29 February 2012, cost of debt is 7.66%

http://www.centroretailaustralia.com.au/news-publications-financial-reports/company-asx-announcements?page=2

This excludes BBSW rates coming down since this time and hedging which may be now out of the money for this reason.

The increased interest cost would be $6.5M ($85M x 7.66%)

Our EPS would therefore be affected by 0.049c. ($85M / 1.341B shares on issue)

The revised EPS would be approximately 14.6c (15.1c less 0.5c)


By going ahead with the issue of shares, we are compromising our EPS by 0.4c.

At a dividend payout ratio of 81%, our dividend will be 0.32c per year lower.

This is an addition to 8c NTA unnecessary dilution.

Our gearing would still be well under 35% even with an $85M payout, which would still trigger in a 0.3% margin reduction. See page 2 of below announcement

http://imagesignal.comsec.com.au/docserver/01301260.pdf?fileid=01301260&datedir=20120529&edt=MjAxMi0wNi0wOCswOTo0MDo0NysxMjArMCtjb21zZWMrcmVkaXJlY3QrL2ltYWdlc2lnbmFsL2Vycm9ycGFnZXMvUERGVGltZW91dC5odG1sKy9pbWFnZXNpZ25hbC9lcnJvcnBhZ2VzL3BkZmRlbGF5ZWQuanNw

CRF will still obtain their investment credit rating irrespective of the payout as the half value of the three largest assets sold for $690M, 3.7% above book value.

If we pay out $85M in cash, the net proceeds theoretically would be ($690M - $85M) = $605M

The book value of these assets were $665M

However as these assets were sold for 3.7% above book value, CRF’s existing half share will go up for approximately the same amount ($690M - $665M) $25M

Its gearing will still remain very low in the high 20s.

There is no basis at all to payout the CNP secured holders in shares.

Cheers