new interest, page-8

Heron

I think you may be pre-empting the conversion of the "convertable eurobonds" a little too early. The decision to convert is solely at the holders option after the "mezzanine bonds" of 9.94 Billion Yen or $123M AUD (and growing due to the 4.91% capitalising interest component) is repaid. That's more than 2 or 3 buildings and you must also consider the senior debt lender will expect most of the proceeds from any sales to pay down the "senior bank loan" of 43.38 Billion Yen or $540M AUD.

I agree with recko1, the GJT share price has nothing to do with the eurobond lenders' decision to convert the eurobonds into a 40% equity stake. The conversion option is a chance for the lender to forego the repayment of their loan (I calculate in Jan 2012 will be a debt of about $23.5M AUD) in return for a 40% equity position at the Japanese company level (the TK). This would really only happen if income and asset values from the property portfolio start to improve. This is ultimately what must happen for the GJT share price also to improve.

I believe you should hope the eurobond lender converts the loan to equity as it will mean there actually has been an improvement in the level of equity (i.e. total property portfolio value minus total debt) of the Japanese TK. Remembering you can by a GJT share for 3.5 cents giving you a stake in 60% of the equity in the Japanese TK.

If you where to follow anything about GJT at this stage I would recommend following the ability to continue to generate net income from the property portfolio. If it keeps dropping there will be problems. If it increases, eventually there will be smiles of the faces of GJT share holders.