One option for CNP will be to simplify its capital structure substantially. Someone mentioned before that CNP is made up of funds which is owns a % of, and those funds then own a % of CNP. Complex.
The funds in turn own the shopping centres, and take the rent in, distributing it to their shareholders (in this case CNP and the CMBS holders, right?)
CNP cannot therefore sell the shopping centres easily or quickly, or so the argument of a bank analyst went last week, because it is only part owner of the shopping centres.
One way out for CNP will be to issue shares to a fund and its notholders in exchange for the shopping centre (the asset) and to roll up the liabilities (debts) of that fund into CNP. This allows CNP to gain 100% of the nett income from the shopping centre, rids it of the CMBS libility, and makes the underlying assets directly accessible to CNP for this supposed 15/Feb fire sale.
Even if CNP didn't sell the centres, the fact they now earn 100% of the rent money from the asset would increase their nett income and reduce their gearing over the whole group - simply be issuing shares.
This is one way they could get their hands on assets for sale, extra income, and/or issue equity to raise cash to reduce debt. It may not be viable legally, or corporately (I'm no expert on the rules of incorporation of managed funds) but I can only assume it's a viable mechanism.
CNP is far from plucked.
CNP Price at posting:
0.0¢ Sentiment: None Disclosure: Held
