Buffett - a reply to your comments to me yesterday (believe it...

Buffett - a reply to your comments to me yesterday (believe it or not I actually work sometimes)

I have not put any numbers down because I do not believe many of the assumptions that the media and people have made. Further most of the recapitalisation plans that have been forward to date have not progressed and I have no faith that a D2E swap will occur (and I hope I am correct). Further there are some new directors now and they may have a different view. Some of the outgoing directors are from retail and may have little idea about finance (hence the predicament the company is in).

As a shareholder, I will not allow the valuation of the service business to be $0. It makes up 30% of the revenue of the company and is profitable. What the market would pay for it is anyones guess (particularly now) - but $1 bill is reasonable, which more than doubles NTA.

I do not agree with your rational of converting the debt at current prices - which factor in bankruptcy. What the Directors must do is use financial modeling with up to date income statements to show what the company will be like with preference shares issued. Last financial year had massive right downs. Are they likely this year? What does the current P&L Centro projections look like this year? Maybe Centro will be profitable (before the accountants do there thing).

Centro is a stapled trust. How will this change in the future so dividends are not paid with by borrowings?

With interest rates coming down again today, the 9% preference share interest may come down to 7%?

All of these factors need to be taken into account before a D2E swap is put forward, because unless they do they are essentially giving the company away for nothing. Directors would be up for another class action.

Nobody clearly knows what the outlook will be, I am not counting on over $1, but I am sure it will be more than 9c. If that is all that is offered clearly the directors are better off putting Centro into liquidation.