centro as responsible entity, page-2

Hey, Defabstar I refer to your following comment.

"I was having a conversation with a mate last night who suggested that the risk for the whole Centro group is that if a debt for equity swap eventuates for CNP, that the banks will sack Centro as the responsible entity and employ another entity devaluing the Centro group significantly as most of the value in the Centro group is recognised in its ability to operate as a responsible entity (RE)."

My question is why would banks remove Centro as RE as that is where the value is. That will be the compelling factor to eventuate debt for equity swap as the gearing level is too high and there is not much asset value left after paying debt. Another reason banks will keep Centro as RE as they are managing it well as shown by their annual report.

My belief is that they will definitely workout some arrangement for long term extension else we would have been seeing lots of fire sale right now. The only uncertainty is the dilution , but again that wouldn't affect CER.