Zero interest on HC. IEF has significant appeal to me given the...

Zero interest on HC. IEF has significant appeal to me given the ability to participate at the bargain basement level of the insiders.

There will be no overhang from the 4.1c rights issue. The No2 unitholder, Torchlight, will acquire all lapsed rights. Potential rights sellers are likely to accept 0.1c ($0.001) today, as it's the closing day. I've been buying the heads and rights or some time. I've now had my fill.

Based on the independent experts report, the post raising NTA will be 9c (worst case) to 11c. Note that these values give a cap rate (roughly cash yield) approaching 10%. Note that the independent expert didn't consider the initial rights proposal was fair and reasonable. They required it to be renounceable, so that anybody had the opportunity to buy in at the level of Torchlight. The market has overlooked this little gem of information.

Torchlight specialise in "deep value" situations. Through Bodiam, they instigated the reorganisation by cleverly (or deviously) trumping the previous RE's option over the Icon leasehold assets. They then leveraged that position into this restructure and rights issue, where they are the main beneficiary.

But everyone's got something along the way. The mgmt contract has been internalised. Big costs savings and interests are finally aligned to increasing unitholder value – after this rights issue is concluded.

The pre-issue holdings were: Orbis (16.5%), Merricks Capital (10.6%), Renaissance (8%), Torchlight (17.6%), Remaining Security Holders (27.3%). Many small holders will still be Mum & Dad investors, enticed by the secure ING spruiked property investment of years ago. They won't appreciate what's going on and Torchlight will pick up many small holders lapsed rights. Very surprised if the other 4 insiders don't take them up in full. I think the outcome will leave a balance of control.

Note all mgmt and directors will be taking up their entitlements – in full.

A good chance that Panthers will repay $10m of the $63m loan very soon. Panthers have also declared all property, other than the Penrith Club, as non-core. This means their directors can now sell without going to a membership vote – and thus repay our loan by 30 June 2013. Also note that the Panthers received DA on their Mulgoa land in April. That can only add to its market value. That land is part of our loan security. The contracted "interest rate creep" also provides a strong incentive for the Panthers to repay. In addition, our $24m JV has the security of non-cancellable leases, backed by property, which also have contracted creep provisions. Think about it.

Finally, it was rumoured that Icon was carrying $60m of debt to the CBA. Perhaps 60% of that related to their IEF leased hotels, at say 10%. We will be commencing the operation of those hotels without the burden of any of that interest cost.

A messy washout year to 30 June 2012. A nice clean slate from 1 July.

The big negative is the lack of liquidity. Imo the low entry price outweights this risk. It forms part of my deep value section. Believe this will turn out to be a low cost hold, where those strong cash producing assets finally work for the benefit of all holders. Plan to hold while the world goes through its big reset.

Last day of rights sale today.