The current share price is purely based on the risk of Centro...

The current share price is purely based on the risk of Centro going under and is not a reflection of the companies value trading on into the future.

The Hybrid Debt for Equity Swap has to be considered on the actual companies worth as a going concern, less a percentage to make it worthwhile for the banks to roll debt into equity, it also has to be at a price that current shareholders would except, a basic calculation should be as follows;

Current No. of shares 896421000
Current NTA $0.69
Goodwill (assume $0 may get a modest amount)
Service Business $2.23 (profit was approx. 200 million last year, allow 10% profit return on investment gives a business value of 2 Billion divided by no. of shares on offer)

total share value = $0.69 + $2.23 = $2.92
Total company worth $2.92 x 896421000 = $2,620,000,000.00

The company needs to raise 2 billion dollars so it issues an extra 3,103,579,000 shares to the banks taking the total shares on offer to 4 billion.

This gives a new share price of $2,620,000,000.00/ 4 billion shares = $0.66, then assume centro offer the banks a 10% reduction on the new share price to make it worthwhile, leaving the new share price at $0.60.

Equity swap total =3,103,579,000 x $0.60 = $1,848,040,222

This price allows a 10% return on the service business and a 10% return on their new issued shares.

The remaining loans can then be rolled over for a further 2 to 3 years. Centro then has the breathing space to complete restructure and still market properties at accectable prices to reduce debt further.

CBA have secured loans that are recieving interest payments, as I see it their predicament is as follows, pull the pin now, sell their secured properties at fire sale prices maybe get 50% to 75% of their money back, in doing so they plunge the commercial property prices throughout Australia and harm if not place more of their clients into the same situation as Centro.

The other option is their loans are secured they roll them over for 2 to 3 years allow Centro to trade their way out of trouble over the next 2 to 3 year period, property prices start to recover inceasing CBA's LVR on their loans everyone is a winner. Even if Centro has to go into administration during the 2 to 3 year roll over period CBA are still recieving interest payments, the property market should of improved allowing them to sell their secured properties at a higher price and return them more money.

I am a holder of Centro shares and this is purely my view.