The CNP?s debt holders suffered a shortfall of $1.6b after the sale of US assets so they have to recoup some of its losses from somewhere and what better way to do it than from CNP?s cashcow CER!
The potential dilution to CER as a result of the class action and the extortionate management fees it is charging to the new entity, which CER is subsiding more than its fair share is a good place for CNP to start.
I already mentioned previously that the syndicates aren?t being penalised at all for being granted the gift of liquidity in the new Centro.
What irks me as well is that there was a procession of consultants, lawyers and investment banks drawing on its cash cow to ensure the directors? dream would become a reality.
You gotta remember that the Tsenin is the group CEO of Centro. CER doesn?t have its own CEO so it clearly is Tsenin?s ambition before standing down that he brings in all Centro entities to form one happy family.
I didn?t hold CER when it merged with the CSF portfolio in late 2007 but we know all how that merger panned out for CER very shortly after?.
So now we have two options.
We can sit here and go ?oh well, that?s life, what can you do? or stand up and be counted.
CER has 27 quality assets of which it owns 3 outright.
Therefore 24 of these assets are jointly owned with CNP and/or various Centro funds and syndicates.
An arrangement could be where CER disposes of its half interests in 12 of these properties to the respective half owners and receive in return the half value of the 12 properties, which it has a 50% interest in.
CER could then have a 100% interest in (12 +3) 15 properties and its gearing would remain unchanged as the swap would take place at current valuations.
It would then dissolve itself completely from any association with the other Centro entities.
CER could then look to internalise its management or market its entire portfolio for sale. Given it would have no cross ownership issues with Centro, it could be attractive to a private equity suitor or a Westfield, GPT etc
Anyway, the finer details don?t need to be established but the first thing to do is try to gauge how many votes we have to put an end to this merger.
Without 50% of votes going our way, we have effectively failed.
Of the 2.3b shares on issue, 1.15b approx. is held by non CNP debt holders. Therefore we need about 575m votes going our way.
Once we have gathered up a significant number of votes, then we can put forward our concerns to the board.
How does everyone feel about this?
CER is worth substantially more than this and it is up to us to do something about it!
CER Price at posting:
29.5¢ Sentiment: Buy Disclosure: Held
