my revised nta calc arrives at 1.711, page-98

thanks defabstar,

comprehensive as usual; most helpful. are you across their debt?
I assume that table in the ann. was debt net to them & that's $6.1 billion. your new NTA figure of $1.43 gives us equity of $3.29B on 2.3B shares. So debt to equity now a hefty 185%. The old rule of thumb with REIT’s was when debt/equity went over 100%, sell. But as long as they can manage the debt by making the interest payments & then reducing the overall debt, then they should survive. The banks think they can; thus the extended deals. Breathing space now to end of this year, when $1.4B needs to be rolled over.
Servicing that debt is now their priority, then reducing it.
The ann said both Super & CSF would not pay distributions back to CER while those facilities in place (one to come down to $50m).
Likely all other “distributable profit” will likewise be used to reduce debt. Even though they don’t have to sell assets in a fire sale, they do have to sell assets & mainly in a rapidly declining market of the USA.
Problem for companies in these situations is they are often forced to sell their best assets as they are the only ones than can realize meaningful amounts at reasonable valuations. Let’s hope they don’t have to sell too many jewels.

Obviously parts of the debt fall within other entities like Super. But their net to CER debt is still relevant. You can’t count the equity Super gives to CER without the debt.
The banks would have a complete understanding of how all the debt will be serviced & how far it needs to be reduced. What we need is a clear statement from the company explaining all this to the shareholders, as it is now at the core of the value of CER now & in the immediate future; next couple of years at least until debt gets down to more normal levels.

I still hold, but I’ve taken 70% of my cost out. I was hoping to get all cost out at double, but was a bit greedy & lost that opportunity at 13, having to sell a few more at 11 on open yesterday.

From here what to do? Well, I’ve got to get my head around the debt & their ability to service it. Divs were never an issue for me, as I couldn’t see them being paid with such large loss last year & obviously another big loss this year. Their equity will take another hit with the expected big writedowns at Dec 31 ’08, making that debt/equity ratio even worse.
I would appreciate your take on the debt, servicing, reduction & debt/equity%.

Thanks,

Ned.