I have never seen this daylight robbery in Australian history.
Unfortunately I have seen and been a shareholder in worse than this before, Australian corporate history is littered with less than optimum outcomes for shareholders.
This does look like being pretty close to the worst outcome for CNP holders imaginable, the banks took huge haircuts too, seems the winners will be the funds that bought the debt from the banks and are now demanding the assets.
I cant fathom why the banks sold their debt at 50 cents on the dollar, would they not have been better off doing a debt for equity swap themselves as CNP wasnt that far underwater when they sold their debt to the fundies.
But after holding through OZ minerals nightmare experience, it seems banks can, and do what they want, and boards dont always do what appears to be right thing for shareholder.
I have been watching this as mainly a CER holder, having held some CNP, but switching nearly all to CER in 09.
I cant work out why the CNP price shot up in mid/late 09, from teens to around 50c a share, from memory this was the Chinese buying, the only thing I could think of at the time was the Chinese group was going to take over both cnp and cer and buyout the bank debt (at a discount) and untangle the web, this would have been a very profitable excercise.
But by not having the ways and means to go the full monty, they have really made a meal of this, CER always had a positive NTA and CNP has been negative since the crash, yet CNPs price spiked to 50c whilst CERs price only jumped a little at the time but was trading around half that of CNP. Who was advising the Chinese investors, it was a very high risk move unless you had the funds to take it to fruition or had information not generally available. How are these investors connected?
I kind of understand now, how tangled this web is, yet some have done a great job of untangling the web for us and letting us see the whole picture and I do thank defabs and others on the cer board for imparting their knowledge on this issue, what I am getting at is if defabs could see and understand what was the true situation, why did the Chinese investors jump into CNP and why did this apparent final outcome, ie CNP getting shafted, really come as such a surprise, CNP had more debt than they had saleable assets and the now controllers of the debt were not going to wait until the prices of shopping malls increased when they could basically enforce liquidation now.
This action by the fundies to force change, from holding debt (that was paying quite a good return) to holding hard assets enforces my opinion that big inflation maybe even hyper-inflation is now a distict possibility, I think this will position them well in the coming few years, unfortunately at the expence of CNP holders, it may not be fair to shareholders, but he who owns the debt, makes the rules in this case.
ps I think defabs advice on this thread is good advice, unless of course something out of left field happens
cheers grant
the above is opinion only and written without prejudice
CNP Price at posting:
8.3¢ Sentiment: Sell Disclosure: Held
