why techinically it could go back to 40c soon, page-8

Just some general facts to look over

CNp were and have been given an extension until 15th feb 08 to come up with a plan of attack.

You must ask yourself, if they are such a risk why did the lenders give them the 60 days to find a solution??

The short term debt (1.9bln) is a rollover facility that would under normal circumstances be rolled over for another 6 months or whatever the term were.

The 1.3bln was a maturing facility that has capabilities to be rolled over....its not like a normal commercial facility over say 10/15/20 years.

Negotiation of the short term facility didn't occur.....that is NOT CNP's fault as such.

They need to reduce their gearing levels to enable long term funding to be arranged.

The short term lenders have no right to make CNP sell any assets, and especially as a fire sale, as long as repayments are made........and they dont even have to be on time......all lenders must give 60-90 days grace for any late repayment.

Then and only if then you are still behind, the lender can take you to court and get a possession order.....then sell the property through an independent auctioneer at fair market value.

The above can be another 3 month process in itself....so now we are talking 5-6 months from now.

The first mortgage lenders dont have any issues with the above, they are in pole position.

CNP just sold a property in the US for 30% more than its bopok value.........how can that be when several here think the US retail market has collapsed...lol....I can tell u it isnt hasnt and wont....sure it may slow down in value movements maybe....by with a 99% occupancy rate......who cares.....CNP still collect.

Lastly......If CNP have over 26bln in assets...........and very good assets at that, then how much would they need to sell to pay out in full the 1.9bln??

26bln assets
9bln equity

remember they dont have to sell any assets however it may be the best way to remove the short term higher interest loans altogether.

Ok so lets ay they sell ...


9bln in assets at fair market value
....Actually lets say they sell it at 20% less than their book value

So 9bln less 20% 7.2bln
That also means the 3bln equity would reduce to 2.4bln which pays out the short term and covers sales costs etc.


This leaves the following...

Assets $17bln
Equity $6bln (but lets say the euity is now reduced by 20% because of the latest sales) leaves

4.8bln


17bln asset
4.8bln equity

850,000,000 shares

SP should be $5.64....about what it was before this debacle.

But yes never a true science I agree

So lets say 50% is fair then.....agree??

$2.82

ok still not happy....

another 50% off

$1.41



Anyway what will happen is the LVR gearing levels will be reduced, meaning the overall picture for CNP will be much better and a safer place to invest.....so I see this whole thing as a great thing for investors.

The value is still there

All that changes is the assets are less and the equity is pretty much the same.....it aint rocket science.

of course the share price will now stagnate until further clarification is told.....

the big boys are cautious due to their risk profiles, cant buy much as they would get in trouble if the shite hit the fan......also plenty of sideliners waiting to see what happens.....

then the profit takers and the nervous nellies and daytraders playing with it in the meantime......

Understand this and your half way to understanding where this is at and the opportunity it presents.....both good and bad.

Anyway im in for plenty, mind you at much lower than the current SP, as many other are who were smart and brave enough to buy in when it fell.........and im sure we will still be here when the story unfolds and we are back well over $2.

PS: notice barclays and CBA sold around $1.14.....why only 1%.....why not 100%.....why didnt they sell 100% at 1.40 if its so bad??.....why is the Sp even near $1 if all is bad??

Why did Macquire sell out and obviously lost a bundle when they could have stayed....instead of seeling all the way down to 40c??

Why even bother paying top notch advisers if its a lost cause, do you think the best in the business will want to lose face by not finding a solution.....thats what they do and are best at ...remember that.

Anyway good luck all.......Warnie