CRF has nothing to do with CNP. CNP is just a shell company with only $10M put aside for the benefit of contingent creditors.
PWC almost derailed the recapitalisation as it was arguing more funds should be allocated to the class action. Ruling went in our favour as any compensation awarded to the class action claimants of CNP would have resulted in a $0 return had the recapitalisation not proceeded.
CRF is a spinoff of CER and has nothing to do with CNP. CRF are quadrupled stapled securities. Following announcement explains this: http://www.asx.com.au/asxpdf/20111202/pdf/42314zsz3c163v.pdf
All the shareholders who lost out on CNP would only be entitled to compensation from CNP/PWC. Shareholders who lost out on CER would be entitled to compensation from CRF/PWC.
The balance sheet misclassification occurred in both CER and CNP's balance sheets and as both companies are seperate legal entities, the claims made in relation to these companies would have nothing to do with each other. The error in CNP's balance sheet was much larger than CER's error.
Of say $130M CRF/CNP needs to pay, CNP might have had twice as many claims as CER and the CNP claims may be much larger in nature.
In my last post, I said the market cap fall of CNP was much much larger than CER's. CER also held up better in % fall terms. CNP had many more mum and dad investors whereas half of CER was directly/indirectly owned by CNP.
This should protect us further as I believe CNP will cop a larger brunt of the settlement costs.
Anyhow, even if it is a 50/50 split, the CATS liability of $66M has already been provided for in the HY accounts.
If we are entitled to $80M insurance cover also, it means CRF will be just about protected in full. There may be some legal costs, which it may need to incur that isnt protected.
If we are not paying any settlement costs to claimants, it will also mean no dilution in the share capital of CRF. CATS will not be enforced. This may mean a writeback of $65M in our accounts, which may then increase NTA from $2.35 to $2.40.
Anyway, whether our NTA ends up being $2.30 or $2.40 as a result of this, uncertainty is now gone and a massive rerating should be on the cards.
I look forward to CRF coming out of the trading halt!
Cheers
CRF Price at posting:
$1.85 Sentiment: Buy Disclosure: Held
