GPT has a number of options 1. sell assets eg hotels 2. do a capital raising say a 1 for 1 equity raising @$1 3. walk away from the JV and let the banks deal with the banks 4. a combination of any of the above
the balance sheet for JV is as follows
Assets $7 bn Debts $5bn equity $2bn
the debt on JV is non-recourse to GPT. I think this means that the company can just walk away from the JV and leave it up to banks to sell the assets
I have read somewhere that analysts think there is only $500 million worth of equity left in JV
I personally think the best solution to all our problems would be to walk away from this investment bank disaster.
The banks wouldn't like it but they shouldn't have given GPT the loans in the first place. They should have be able to spot Peter Joseph as the clown he is.
Walking away would improve the balance sheet immeasurably
on look through basis it looks a bit like this
Assets $21bn Debts $10 bn equity $9 bn
$2 bn has been loaned so equity would normally be $11 bn however for some reason it is not
the GPT balance sheet looks like this
Assets $14bn Debts $5bn equity $9 bn
If the company were to walk from the JV the balance sheet would look like this
assets $12bn debts $5bn equity $7bn
gearing would 41.6%
equity per share would be around $3.18
a decline in asset values of 10% would look like this -10% = -.318 NTA = $2.86
a decline in asset values of 20% would look like this -20% = -.636 NTA = $2.54 a decline in asset values of 30% would look like this -30% = -.954 NTA = 2.22
a decline in asset values of 40% would look like this -40% = -$1.27 NTA = $1.91
a decline in asset values of 50% would look like this -50% = $1.59 NTA = $1.59
Any comments appreciated.
GPT Price at posting:
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