CNP - Centro Properties Group

"Shareholders get nothing..."? Shareholders will get better SP value on the shares, what are you talking about and dividends will come back in future.

ROE said:

They can say as part of refinance agreement.
you give us all your dividend and pay down debt until such time we are comfortable with the level of debt then you can pay your share holders
and if brown stuff hit the fans, we got some dividends and your share holders get nothing.

Click to expand...

"Ignore recent problems and get on with your lives " would be good advice because we can't do anything about the situation ( except sell to crystallise a loss if so inclined ) and worrying won't achieve anything.

At the same time, I'm not expecting this stock to do much more than struggle on for the next couple of years or so.

Disc: Bought a few on the way down at $1-40

As long as it can struggle along for a few years and doesn't just die, that is ok. If it can keep going it will rebuild a better business and we will all benefit, but to rebuild it will take time and rome wasn't built in a day. Once they prove to the market they are going to work through it, confidence will return. The market isn't going to go gaga too fast, as generally property sector is very out of favour but it will come back & when it does .... gusher

Only my optimistic outlook working here...

oldblue said:

"Ignore recent problems and get on with your lives " would be good advice because we can't do anything about the situation ( except sell to crystallise a loss if so inclined ) and worrying won't achieve anything.

At the same time, I'm not expecting this stock to do much more than struggle on for the next couple of years or so.

Disc: Bought a few on the way down at $1-40

Click to expand...

I'm a bit new to the stock market, but I assume this is great news (for the company and the SP). I am wondering what my selling strategy should be, if I'm looking to get out within the next three months, i.e. should I sell at the top of the first peak on Monday, with maximum momentum, or wait for 2 months for it to stabilise?

That being asked, do you think this will be a good long-term stock to hold? Would my money be better placed here than in BHP?

gOSH hARTLEY, You ask some hot questions. If anyone here knew the answers we would all be zillionaires in no time. No one can advise you on how to gamble on the stockmarket, its something wise people would not encourage. If you want to trade short-term on CNP then I wish you luck. For one thing how can you sell at the top of the first peak on Monday? How will you know when you are at the top? You only can see what the top was at the end of the day. Tops and bottoms can only be judged retrospectively.

If CNP spikes on Monday and it should but there are no guarantees, you could sell if you wish when a decent profit is showing for you. A profit is what you are after. You should decide what a good profit would be well in advance and decide well in advance if you decided to 'hold' how prepared you are to take the risk based on what you research tells you.

YOu can't compare CNP with BHP especially at this point in time. They are different animals. You should engage a professional adviser I think.

We are not qualified here to give advice, we do not stand by it and have nothing to lose if things do not work out.

Personally I hope this CNP restructuring works out and there is a good chance it will. People will make money trading it in short term and many will lose doing same.

I wish you luck whatever you decide. If you want to make certain money in longterm probably BHP is the better choice. If you have money you can afford to risk then CNP might be a good gamble. Are you a gambler?

hartley said:

I'm a bit new to the stock market, but I assume this is great news (for the company and the SP). I am wondering what my selling strategy should be, if I'm looking to get out within the next three months, i.e. should I sell at the top of the first peak on Monday, with maximum momentum, or wait for 2 months for it to stabilise?

That being asked, do you think this will be a good long-term stock to hold? Would my money be better placed here than in BHP?

Click to expand...

Haha I see your point, I suppose a slightly more answerable question would be, with your greater knowledge of the stock market, does news like this often send the SP up high, from which point it slightly corrects downwards, or does it always go up steadily? I realise that these things aren't predictable, but I would like to know whether they happen regularly or not...

I suppose I am still asking too much haha, with time I will gather experience, but I would still value any response you have.

To answer your question, yes, I am a gambler (when the odds are good enough), and I can afford to lose what I have in CNP.

Well CNP have only had a reprieve from wipe out not a clean bill of health. There is still no certainty at this stage so I would expect that the SP is likely to go up on Monday who knows how high, but then it will drop with the continuing uncertainty and with people selling up taking profits. We can only expect volatility for the next few months and at what level the SP will stabilise we will find out when it happens. The degree and rate of rise and fall is unpredictable but if you check the price history on CNP you will see that the SP rises and falls have been extremely fast. We will see what happens.

hartley said:

Haha I see your point, I suppose a slightly more answerable question would be, with your greater knowledge of the stock market, does news like this often send the SP up high, from which point it slightly corrects downwards, or does it always go up steadily? I realise that these things aren't predictable, but I would like to know whether they happen regularly or not...

I suppose I am still asking too much haha, with time I will gather experience, but I would still value any response you have.

To answer your question, yes, I am a gambler (when the odds are good enough), and I can afford to lose what I have in CNP.

Click to expand...

Centro sinks $1.5bn deeper in debt
Miriam Steffens, Sydney
February 18, 2008

CENTRO Properties Group has admitted its debt situation is more precarious than previously revealed, with current liabilities about $1.5 billion higher than stated in its accounts.

The embattled shopping centre owner disclosed the accounting mistake on Friday night when it confirmed it had won a last-minute reprieve from its lenders to refinance debt due that day.

The board has suspended its 40.6 ¢ per share distribution forecast for the year until it finds a way out of the crisis.

The additional current debt comes on top of $1.1 billion disclosed when Centro corrected its preliminary 2007 accounts in September. It means the company will have to renegotiate or repay close to three quarters of its $3.6 billion total debt within the next 12 months.

Centro has so far refinanced about $209 million of the additional $1.5 billion in short-term debt, and said it was "continuing its review of the circumstances surrounding the original classification" of its liabilities.

The latest announcement provides fresh ammunition to possible class action suits by disgruntled shareholders, who have seen the value of their investments decimated over the past two months.

Centro's shares have plummeted 89% since mid-December when the company revealed it was caught out by the global debt market crunch, and was struggling to refinance $3.9 billion in short-term debt after its massive US expansion.

The stock is expected to start trading again today after shares were suspended at 61 ¢ on Friday pending the outcome of negotiations with Centro's Australian and US lenders, including ANZ, Commonwealth Bank and JP Morgan. Talks dragged on until late Friday as one of its main lenders held out for better terms. The company ultimately secured an extension for about $US1.3 billion ($1.4 billion) in debt for its US business until September 30, plus $US80 million in additional funding.

The Australian lenders have granted a lifeline until April 30 for $2.3 billion in debt.

Centro expects the Australian banks may also come around to extending their facilities through to September, but they have kept their options open to monitor the progress of its reorganisation. Bond holders in the US have agreed to hold off alongside the Australian banks.

Centro is looking to sell its interests in its unlisted Australian and US shopping centre funds or find a cornerstone investor for the whole company.

Glenn Rufrano, who took charge last month after the ousting of the former boss, Andrew Scott, said the extension would give Centro "sufficient time" to work out its options. "The strategic review is progressing well with a significant number of parties interested in pursuing a recapitalisation of the group," he said.

Centro's listed spin-off, Centro Retail Trust, has also had to rack up its current debt figure, saying $598 million of its $1.4 billion in debt would have to be reclassified as due in the next 12 months.

Centro Retail has also suspended its dividend guidance for the year.

vida said:

Centro sinks $1.5bn deeper in debt
Miriam Steffens, Sydney
February 18, 2008

Click to expand...

Vida FYI there are differences in your posted article above compared to the printed article from smh, things are missing or changed.. not sure where yours came from or a repost from elsewhere though I've marked in bold the missing text.
=http://business.smh.com.au/centros-15b-debt-headache/20080217-1sny.html

* Centro's $1.5b debt headache
* Miriam Steffens
* February 18, 2008

CENTRO Properties Group has admitted its debt situation is more precarious than previously revealed, with current liabilities about $1.5 billion higher than stated in its accounts.

The embattled shopping centre owner disclosed the accounting mistake on Friday night when it confirmed it had won a last-minute reprieve from its lenders to refinance debt due that day. The board has suspended its 40.6-cents-a-share distribution forecast for the year until it finds a way out of the crisis.

The additional current debt comes on top of $1.1 billion disclosed when Centro corrected its preliminary 2007 accounts in September. While Centro's total debt remains unchanged, it means the company will have to renegotiate or repay close to three quarters of its $3.6 billion in liabilities within the next 12 months.

Centro has so far refinanced about $209 million of the additional $1.5 billion in short-term debt, and said it was "continuing its review of the circumstances surrounding the original classification" of its liabilities.

The latest announcement provides fresh ammunition to possible class action suits by disgruntled shareholders, who have seen the value of their investments decimated over the past two months.

Centro's shares have plummeted 89 per cent since the company in mid-December revealed it was caught out by the global debt market crunch, and was struggling to refinance $3.9 billion in short-term debt after its massive US expansion.

The stock is expected to start trading again today after a halt on Friday pending the outcome of negotiations with Centro's Australian and US lenders, including ANZ, Commonwealth Bank and JP Morgan. Talks dragged on until late Friday as one of its main lenders held out for better terms. The company ultimately secured an extension for about $US1.3 billion ($1.4 billion) in debt for its US business until September 30, plus $US80 million in additional funding. As flagged in the Herald last week, the Australian lenders have granted a two-month lifeline until April 30 for $2.3 billion in debt, including $1 billion which would be due in the next eight weeks.

Centro expects the Australian banks may also come around to extending their facilities through to September, but they have kept their options open to monitor the progress of its reorganisation. Bond holders in the US have agreed to hold off alongside the Australian banks.

Centro is looking to sell its interests in its unlisted Australian and US shopping centre funds or find a cornerstone investor for the whole company. Glenn Rufrano, who took charge last month, said the extension (no mention of ousting in scott in pubished article compared to post) would give Centro "sufficient time" to work out its options. "The strategic review is progressing well, with a significant number of parties interested in pursuing a recapitalisation of the group," he said.

The company has shortlisted four bidders for its stake in the Australian wholesale fund, which owns $2.6 billion worth of centres. Centro will report first-half earnings on February 28.

Centro's listed spin-off, Centro Retail Trust, has also had to increase its current debt figure, saying $598 million of its $1.4 billion in debt would have to be reclassified as due in the next 12 months.

The trust has refinanced $508 million of that current debt since July 1. It has also provided a $US450 million guarantee for Centro's US bond holders. Like its parent, Centro Retail has suspended its dividend guidance for the year.

I took the article in its entirety from The Age and certainly myself didn't amend anything. This was around 12.30 am this morning, so perhaps the article you found was updated by later in the morning. Its nothing we actually didn't know last week I believe, but it does sensationalise the issues.

vida said:

I took the article in its entirety from The Age and certainly myself didn't amend anything. This was around 12.30 am this morning, so perhaps the article you found was updated by later in the morning. Its nothing we actually didn't know last week I believe, but it does sensationalise the issues.

Click to expand...

I wrote to the Age this morning outlining the story inaccuracies (and asking them to change the misleading/sensationalist headline). I notice they are the only Fairfax paper to write it up with that inflammatory title.

Not sure if it's why they changed but I figure we should all keep them on their toes....no secret on the outcome they are rooting for; I guess they think it'll sell more papers than a solid recovery.

Re: CNP - Share Price Rises

http://business.smh.com.au/shares-rise-despite-centros-15b-debt-headache/20080217-1sny.html


Shares Rise


Miriam Steffens
February 18, 2008 - 11:20AM

Page 1 of 2


Centro shares rose more than 16 per cent at the open but settled back to be up 8.2 per cent or 5 cents at 66 cents by 10.40am, but are still down almost 90 percent since it revealed in December it was having trouble repaying debt.

"It's almost impossible to quantify what the equity in this business is worth,'' said ING Investment Management portfolio manager Justin Blaess. He said the stock was stock dominated by day traders rather than long-term investors.

Well, today's performance (so far) was uninspiring...

So, my rookie analysis would be that unless there is some slow-reacting build up of investor confidence, or there is a big announcement that they have found a new investor/partner or sold assets at a good price in order to finance the debt, the share price is unlikely to break 70c? The fact that they have assets and they have a profitable business under the right circumstances (don't they?) means that one of these outcomes is highly likely.

On the other hand, if there are any more nasty surprises about debt/book-keeping the share price is likely to head further south, but providing short-term debt repayments were the only problem, the big banks would not let them 'just die' completely.

Your (disclaimed) opinions?

Re: CNP - Share Price Rises

moneymajix said:

"It's almost impossible to quantify what the equity in this business is worth,'' s[/I]

Click to expand...

That is also about the best conclusion I can come to at this stage. I'm holding trying to double the price I paid, 55c. I expect to get there, had hoped today was the day. Patience is a virtue.

I'm still not sure what to do with CNP.

Do I trade it when I've made some money, or do I hold onto it like some of my other blue-chips?

Is it still a blue-chip?

I don't know.

I'm tempted to keep it for the 5-10 years I'm holding other stocks (e.g. CBA, BHP etc). I just don't know what to make of it. I have a small holding, bought at 47c. I treated it like a spec mining player.

hartley said:

The fact that they have assets and they have a profitable business under the right circumstances (don't they?) means that one of these outcomes is highly likely.

Click to expand...

That is the problem Hartley - due to the complex business structure, no one is sure what the value is of CNP's tangible asset backing. Scotty called it the 'co-invested funds under management' model. This meant that Centro held a 'cemented', ie controlling, stake in the myriad of listed (CER) and unlisted (syndicates, DPF, DPFI, CAWF, CAF) funds. So, in the interest of KISS, you cannot say what assets Centro own. The fact that they have suspended the FY08 distribution also suggests that they do not know what revenue they are going to earn from the services (ie funds management) business. Remember that much of the services upside were fat acquisition fees, development fees and the like.

Now it is true that the underlying business (ie property ownership and property management) is strong and underpinned by long terms leases (15 plus years) to major retailers in Aus and the US (Walmarts, Coles, Woolworths etc). However what no-one knows with 100% certainty at the moment is who is entitled to this revenue.

As such, the announcement was positive in that there is no fire sale and the banks are starting to trust Glen Rufrano. However the complex structure remains and until it is sold (CAWF, CAF) or wound back there will be uncertainty about future NTA and revenue streams. As for revenue growth, forget it. No acquisitions, proposed developments delayed, etc, etc. That is what drove the share price - the services business valuations. Upside will not return until the base is understood, stabilised and once more capable of driving FUM expansion.

Hence the historically low share price.

Good luck holders. At the moment it is a stab in the dark re a valuation given what is knows, but is has a good property/FUM team and the banks are starting to sound neutral to positive. Still very risky though.

PS: someone asked the difference between BHP and Centro? Where do you begin? Probably Balance Sheet 101 and what a gearing ratio is!

CNP certainly hasn't risen to the latest financing arrangements. A short burst and then sellers took hold and we are back to the starting blocks as the judges called false start. There doesn't seem to be a white knight that sees value in it's property holdings. I hope something happens in the extended time for debt reconstruction. I'll hold and maybe take a punt on a few more if it falls any further.

There seems to be understandable debate over whether or not this is a stock worth investing in and there are a great arguments either way. The press has been very unkind to Centro of late, even though the banks have found some good reasons to be lenient.

I myself am confident that the new boss, Glen Rufrano, is a masterful enough negotiator to see this tough patch through and develop a win/win for all involved.

During the course of my research, I found an analysis of the company.

Hope this helps.

I think the Ord Minett report is damn encouraging but is it reliable? At this stage of pretty much full disclosures CNP is very transparent and their analysis is probably a good guide to what to expect but nothing guaranteed. They think .61 is fair value but now the stock is way down from there.. if I believed in Ord Minett (and maybe i should) i would start to accumulate for the long term and what an amazing once in a lifetime opportunity it could be

Bells have a target of about 80 cents, so it seems that most agree that CNP does have some form of scrap value.... Take them with a grain of salt however, the same analysts had 7 - 10 targets pre the collapse....... Risk/Reward says this one just doesn't stack up.....

One positive that must be said for Centro is that at least the stock is still trading unlike AFG and MFS, and in addition has actually been fairly good in relaying key issues to investors post the collapse.....

Cheers