Buffet, anyone that does as you suggest will find that the...

Buffet, anyone that does as you suggest will find that the convertible debt has a 7 yr term and is convertible subject to shareholder approval. We are not really told anything other than this. We are not even given a conversion price.

Something the announcement does NOT say is that the conversion is at the option of the lender.

There appears to be two conflicting scenarios.

One is that at some future point, presumably when the banks have had their fill of interest receipts and the property markets have improved, they will opt to convert the debt at some undisclosed low price, and effectively takeover Centro.

My problem with this scenario, the one you advocate, is that it flys in the face of the announcement. Where is the evidence for this?

A second scenario is that in 7 yrs time the convertible debt will mature. At that point shareholders must decide whether to allow the banks to convert it to equity or pay back the money. Two things we don't know is whether the debt can be paid back earlier, and the conversion price.

Obviously the conversion price will be central to the shareholders decision.

We (not even you Buffet) do not have sufficient information to know which of these two scenarios is correct, or whether there are others. However, at least the second scenario is supported by the announcement, such as it is.

Atm the market is poorly informed and, as has been suggested, there is currently a good case for the ASX to impose a halt pending clarification.

cosmos