The CNP ASX announcement of yesterday raises serious questions regarding what is happening for the following reasons: 1. US sale of $714m. is really not a sale until unconditional contracts are signed. It is a conditional sale contract! So we shouldn’t be saying it has sold for 10% less than book value, rather it MAY SELL for 10% less than book value. 2. Obviously previously advertised CAWF assets which included 4 properties did not sell within the required deadline of 14/8/2008. CNP couldn’t even announce this sale officially; it had to be found out through a real estate firm’s blunder by allowing access to their so called secured website. 3. Management/Directors are now allowing banks to talk them into possibly hybrid securities as part of the recapitalization process. Given the way banks behaved over Pasminco, it would now seem CNP management/directors are now going to allow CNP shareholders to be raped by the banks in the name of recapitalization. Looks like the banks are now trying to run their version of Pasminco Mark 2 on CNP shareholders. Do we really believe the banks don’t want tremendous upside in these securities at the expense of ordinary shareholders? 4. The bottom line is that CNP needs to make some quick sales & get the current banks out of the equation & find long term refinancing, most probably from overseas that aren’t about seeking defacto control of these valuable assets for their benefit. 5. Whilst I respect the efforts of GR in trying to save CNP, I am very disappointed with how the current directors were not only there when the initial problems surfaced last December, but how they have failed to take control of the situation & allowed many high paid consultants/lawyers bleed the company of funds & now bend to how the banks plan to make a fortune out of CNP assets on the upside. 6. I think it is time shareholders asked some hard questions of the board of directors. For years these directors have collected large directors’ fees & have not been big personal holders in the company, yet when the going gets tough have they provided the leadership most CNP shareholders would have hoped for in a time of crisis? 7. Think it is time shareholders let the new chairperson & his board know we are expecting stronger leadership & control over the situation rather than just delegating the problem of refinancing the balance sheet. 8. Yesterday’s announcement should not have occurred if the board had been prepared to give regular updates on CNP. 9. CNP board may be critical of newspaper/press speculation regarding possible asset sales but they created the vacuum that has allowed this speculation to occur. 10. The directors have allowed possible sales to slip from their grasp due to 2 blunders. Firstly, packaging assets rather than dealing with major assets on a one on one basis. Secondly, the assets have been poorly marketed by trying to do asset sales yet retain management rights. Directors had an excellent opportunity to move assets earlier in the year, but by holding back have lost their window of opportunity as the recession deepens. 11. The board could have shown some leadership yesterday with the announcement being signed by the chairperson rather than the use the company secretary to sign off on the announcement. Regards Buffett PS Trying to have a holiday so only limited access to internet
CNP Price at posting:
0.0¢ Sentiment: None Disclosure: Held
