As I stated at the top of my post "Picking a few numbers out of the air to illustrate a point - I do not pretend these numbers are accurate in any way:"
Yes they were just guestimates that may be a long way out - I'm just pointing out why - if 90% dilution is applied the value of CNP is nowhere 10% of what it reached 18 months ago, in fact possibly not even 3% of that amount.
In answer to the question posed:
My understanding is that once the hybrid securities are issued the dilution is set. The only definite way to avoid dilution is to steer CNP into a position where it has payed of it's outstanding debts (the approx $5B that it is currently rolling over) in full before the AGM on which this is being voted - hardly likely this year one would think!
Another interpretation that is also possible is that if centro can pay off all of it's debt prior to maturity including the 1.05B that applies to the hybrid securities then they can avoid dilution. I think this is not the case though centro have not made this point very clear in the information they have given us to date - possibly intentionally. I think this is unlikely to be the case though as the banks will want a big chunk to make up for what some (esp CBA) have lost on their centro shareholdings - so they want a big chunk of a company that is back on its feet - maybe worth a good few billion at that time though costing them only a few hundred million - to "break even" overall.
I see this as the banks extracting their "pound of flesh" ("ton of flesh" more like!)
CNP Price at posting:
12.5¢ Sentiment: Hold Disclosure: Held
