I hold Centro and have done so from around the 90c level .As I...

I hold Centro and have done so from around the 90c level .

As I see it the latest news should of already been well known by the largest shareholders, the top 10 holders are all large institutional players , and deal in the same market place that CNP source their debt from.

The sub prime crisis has impacted many many players internationally and cnp was clearly caught off guard by the market tightening in this regard , as a result they were unable to roll over existing loans in the time period , despite the fact they have been clearly able to service their debt and their LVR was so strong.

The rates I conclude from weekend press they were paying on the bridging loans was at rates of between .35 to 1.1% over the fed rates .

A scenario that the lenders were no longer prepared to maintain , understandably considering the pressure they were under on their book with so many sub prime loans defaulting and putting pressure on the lvr of their own books.

They as i see it simply couldnt afford to do business with centro on those terms , however Centro has no longer in a position to call the rates , or demand deals with lenders as the latest news has it on the back foot.

The scenario saw the stock smashed by small investors, self managed super funds, index funds, and a genuine sell off because of changed circumstances .

No longer was it expected the company would show growth in its nta , growth in its profit , and growth in its dividend yield has it has done for the last few years.

It was now in a situation where it had to do a review and seek alternatives to its bridging loan debt due in 6-8 weeks .

The company announced it had several players circling its assets , no wonder as the NTA of the assets is at a big premium to the current stock price, it also suggested other players were interested in buying or taking over the business , again for the same reasons , a busness that makes xxxx profit that has a value now 10 times lower than it was 4 weeks ago has to demand interest .

We all know all of this activity , what happens from here is anyones guess but in my opinion the stock is no longer capable of delivering the old performance , and be anywhere near its old value to anyone , nor is it worth 10% of that value.

In my opinion the fact they confirmed their hedging is under presure at rates of 5 odd % is not surprising ,my view was that if CNP are able to refinance and stay stand alone with no sell off assets or takeover I would of expected the CNP re finance options to be at far higher rates , on the positive side the fact is about half of their current position is actually at these rates.

The us job numbers that created the dow sell off Friday will also see fed rate under pressure to cut rates and add liquidity of capital back in to the market, which for someone looking to refinance quallity assets is positive.

In my view it will not be day to day market sentiment that determines which way CNP trades over the next week and beyond but it will be at the mercy of the minds of those that control our funds , ie the instos.

The question will be do they want them to survive, do they want their assets , do they view them as a vulnerable takeover target at these levels , or do they think they are gone , and just jump ship .

I agree we will most likely see a sell off on Monday as a result of the double timing of after market news , bad press, and a dow smackdown but if it does occur I am happy to increase my position at around the 1.10 level, if in fact it does drop 20% to get to that price.