Seriously why are we paying $12m interest (pg87 annual report)...

Seriously why are we paying $12m interest (pg87 annual report) to CNP on a $110m loan (pg75, note 15 annual report)??!!

If they are going to be fair dinkum about seperating the two entities, how about getting rid of this loan which is clearly as Nursery put it, a cash cow for CNP.

It is clearly in CNP's interest for CER to continue servicing the loan as without it, CNP may find it slightly more difficult to remain cash flow positive should interest rates and the AUD continue to move the wrong way.

Why not give CNP one of our half shares in an Australian asset to the value of $110m?

CER's share in Centro Mandurah was valued at $106m at 30 June 2009 (page 63 annual report). Total ABR was $8.2m (pg 16 supplemental) NOI would be about $7.5m.

Assuming the value of the property is valued at $110m at 31 Dec 08 (an increase of 4%, reasonable considering NOI is increasing by around this rate and cap rates are likely to stay the same in Australia), then CER would save $4.5m per annum.

On a DCF basis, this should increase the value of CER by $45m or 2c per share.

This is one way you can increase value in CER via a seperation of CER and CNP.

I'm going to put forward this proposal to CER now.

What does everyone think?

Cheers