if you want to discuss something......, page-7

axlsusie,

"little brain" huh. Self deprecation doesn't suit you. You are no dummy I am sure.

OK Simple example and by the way we were talking about LVR's back then that time I was arguing with whoever it was.

Two properties in this imaginary company. Ignore transaction costs.

Property A worth 1 million
Property B worth 1 million
Total Assets = 3 million

Total lending against properties assume it is at 1.5 million.

LVR = 1/2 therefore 50%. OK so far? Yep I think so.

Property A is sold for 1 million (ie no gain or loss). Proceeds pay down debt. Debt has reduced by 1 million. But what about the LVR. Yep it goes down to zero.

SO in the above clear, easy and clean example asset sales can reduce LVR even if the asset side goes down.

However, it is about that book value issue and if assets are sold below book value LVR can actually increase or stay the same. This is why Rufrano repeatedly said particularly about CNP that asset sales were not enough and not the answer.

Cheers.

PS: Not a bad performance today considering it was a woeful day.