jv is written down to zero but debt

still exists
anybody understand this
here is my reading of it
the balance sheet was

$7bn assets
$5bn liabilities
$2bn equity

the $2bn eqyuity is supposed to be a loan to the jv
It is nonrecourse to the parent company

the multi billion dollar loan which had the 50% gearing covenant is in euros probably to fund this jv

we now hear that the jv has been written down to zero

anybody know what this means?

to make the whole venture worthless it would have to fall 28% ie assets would have to fall in value to $5bn

The $2bn loan to the jv would therefore come off the $14bn

$12bn assets
$5.6bn liabilities
$6.4bn equity

bookvalue goes from $3.82 to $2.90

I think we have lost $0.92

there has been a $1.6bn cap raising at 1 for 1@ .60 plus the singapore deal

so the balance sheet looks like this

assets $12bn
liabilities $4bn
Equity $8bn


"Following successful completion of the Offer, GPT’s balance sheet gearing will fall from 37.3% at
30 June 2008 to 28.8% and its look through gearing will fall from 46.7% at 30 June 2008 to 41.5%, creating considerable headroom to debt covenants in the event of deterioration in asset values or further depreciation of the Australian dollar. Following the capital raising, GPT will have sufficient liquidity to fund all capital expenditure requirements and debt maturities into 2010. GPT expects leverage to further reduce over time as the Group exits non-core investments."

bookvalue= $1.81

interesting thing about it all is that even though the asset has been written down

the debt still shows up

ie they still have look through gearing

so they have written down the whole jv and yet the debt is still there.

perhaps they are hoping to write up the assets at some later date?