Assuming lender vals were correct as at 31/12/09, we need to...

Assuming lender vals were correct as at 31/12/09, we need to subtract the following from the NTA of Y23.8b.
1. Property vals diff of -Y12.6b
2. Hedging difference (assume all is square at 79.38Yen to AUD) + Y7.8b

Net diff makes NTA of Y19b optimistically. At the current exchange rate – this is $239m, or 0.59 cpu.

A loss of this Y19b (to nil equity) would require property values to fall from the lenders current val of 75.5 to 56.5 – a fall of a further 25%. (Although this does not include any capital gains taxes, sales taxes etc, early termination fees etc.)

The other aspect of this situation is that currently GJT has cashflow of about Y2b per annum to use to pay down loans. As GJT needs about Y4.4b right now - there is a two year shortfall.

At present GJT will have a borrowing limit of Y6b at 70% on loan B, and Y43.6 on loan A at 65% totaling Y49.6b. So GJT will need to find Y4.3b, or $54m, or about 13.5 cents per unit. They also seem to need a further Y562m or $7m Key money – so add about 2 cents to 15.5 cents per unit to be safe. It may be that this amount can allow them to roll over their borrowings with a pledge of no distributions.

If we assume a worst case fall of a further 10% in this half (that would be unbelievable IMO – especially if we assume the val reports are already low ballers) – then GJT will have a borrowing limit of Y5.4b at 70% on loan B, and Y39.2 on loan A at 65% totaling Y44.6b. So GJT will need to find Y9.3b, or $117m, or 29 cents per unit. They also seem to need a further Y562m or $7m Key money – so add 2 cents to 31 cents per unit to be safe. This would probably mean that GJT would be safe with their further Y2b per annum for reducing debt.

Some options that GJT has IMO are as follows (to get to the present case situation – not worst case):
1. Call the lenders bluff, and let them trap the excess cash. (Key money issue – still need 2c per unit?)
2. Go into some sort of administration and hope a judge sees that the best outcome is for the cashflow to be allowed to gradually pay out the debts. (Still may need Key money raised). However the whole portfolio could be liquidated in a really crap way.
3. Raise somewhere between 15.5 cents and 31 cents per unit from a capital raising. (16c per unit is an 8 units for every 1 at 2 cents capital raising – this is possible but will be tough on unit holders and institutions – my guess is that unit holders will accept a 5 units for every 1 at 2 cents – 10 cents total raising – probably will require a cornerstone underwriter or investor or more risk tolerant lender who does a shares and lend offering).
4. Sell approximately (assuming need to sell at 5% below bank val and assume that this includes sale costs) Y21b of property – this is about 28% of the portfolio.
5. A mix of the above. (I think if they can sell off a capital raising of 10 cents per unit, with an institution underwriting it, and then sell off Y8b to Y10b of property – this will be a good hybrid. If they announce the capital raising at the same time as announcing a sale of a Y8 to Y10b property – they may get away a 3 c per unit, and do a 3.3 per unit cap raise at 3 cents, with the good news raising spirits.
6. Big moneybags from somewhere buys GJT, or the whole portfolio as a takeover.

IMO the most favourable way for GJT to raise this money may be to sell about Y10b property and raise 10c per unit. They may also allow small holders to build their stake with an offer of (say) $5k/15K worth of units available to all holders, no matter how big their stake (unfair – but great for raising capital, especially if it is made open to non GJT holders, if tey quickly buy some units post announcement).

So hope this gives holders some useful info on how much cash to hold for each unit to be not diluted. At least 10 cents IMO.

At present if GJT was to lose a further 10% of the lender valuations (assuming this incorporates costs), this would give GJT a liquidation value of 11.1 cpu. If sell proceeds were 15% below lender val – there would be nothing left in liquidation.

Again DYOR and don’t rely on me – I don’t have time to doublecheck anything and may be totally wrong about everything here.