I said way back at the beginning of the year that Centros cash flow and earnings is not, and never has been a problem.
The ability to service interest on loans and make regular repayments was never in doubt.
There would be few companies in the world, no matter how well run, that would survive if the banks refused to roll over their loans.
What happened with Centro at the time was almost without precedent.
A good very low risk customer with demonstable cash flow and making its required repayments without any problems, being denied access to funds by the banks.
In response to Jimmy C :
Yep!
Agree.
Rufranno has already said he wants to simplify the overall Centro structure.
If he is allowed to do this, by the banks giving him time, it will happen.
..........................
In a climate of lower trending interest rates, the value of Centros assets based on their increasing rental returns, should over time be much higher than they are currently being valued in this depressed market.
This is precisely why Rufranno does not want to sell assets right now at ridiculously low prices.
Will the banks play the game.
From a lifetime of observation and dealing in my business with banks to our mutual benefit, I dislike them intensely.
Fairweather friends, whose lending policies go from the ridiculous, lending money way to freely, and then changing policy and making it impossible for good customers.
Knowing this, I have never been burnt by them personally, but Centro is a perfect example of the type of behaviour banks indulge in.
Given the schizophrenic way banks behave, there is of course still some risk in owning Centro shares.
The banks will look after their own interests, so logic would suggest Centro will survive and eventually be mutiples of its present price.
Therefore on a risk reward basis they are a buy/hold in a properly constructed portfolio.
But on the other hand the words "banks" and "logic" should never be used in the same sentence.
Caveat emptor
Bendigo
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