CNP - Centro Properties Group

Nathan_b said:

They can take their time in the THalt.

i am thinking when there reporting the 48hours that the jurnos are refering to a trading halt.

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There are three things CNP can do:

1. They have until the beginning of trading tomorrow on the current Trading Halt request
2. Make announcement (anytime today) and then trade
3. Extend the trading halt

see the article below.

high penalty interest charged on extension according to the report.

http://www.theaustralian.news.com.au/story/0,25197,23661055-643,00.html

Extension secured, ASX announcement this afternoon
Thanks to the last minute intervention of JP Morgan!

http://www.theaustralian.news.com.au/story/0,25197,23664405-643,00.html


Centro secures debt deal with banks

CENTRO Properties Group has won support from its banks for a seven-month extension on its debt maturities.

The decision came after some last minute intervention from JP Morgan Australia chairman Rod Eddington who convinced wavering Commonwealth Bank to back the deal.

German bank West LB also agreed to the extension.

Centro (ASX: CNP: quote) is expected to release a statement to the ASX this afternoon confirming the news.

This gives the company more time to restructure it self and to sell property to meet its debt obligations.

The Commonwealth Bank had demanded more security before agreeing to the extension and substantial changes to the documentation which was eventually partially agreed to.

This followed late night talks between Sir Rod Eddington and Commonwealth Bank chief executive Ralph Norris.

CBA has a $1.1 billion exposure of which just $160 million is unsecured, while JP Morgan has the biggest exposure of all banks totalling some $2.05 billion.

LOOKS GOOD TO RUN GUYS!!!

Check this article that just came across my desk 1 hr ago

Source: www.theaustralian.news.com.au [Breaking News]

Sir Rod rescues Centro
John Durie | May 08, 2008

CENTRO Properties Group has won support from its banks for a seven-month extension on its debt maturities.

Last-minute intervention from JP Morgan Australia chair Sir Rod Eddington convinced wavering Commonwealth Bank to back the deal, and German bank West LB also agreed to the extension.

Centro is expected to release a statement to the ASX this afternoon confirming the good news.

This gives the company more time to restructure itself and to sell property to meet its debt obligations.

While some have focussed on WestLB and its $186 million exposure, it was actually the Commonwealth Bank which proved to be the most intransigent, as the deadline which threatened to put the group into insolvency loomed last night.

CBA demanded more security before agreeing to the extension, and substantial changes to the documentation, which was eventually, and partially, agreed to.

This followed late night talks between Sir Rod and CBA boss Ralph Norris.

CBA has a $1.1 billion exposure, of which just $160 million is unsecured, while JP Morgan has the biggest exposure of all banks, totalling some $2.05 billion.

JP Morgan was also closely aligned to Centro’s former boss, Andrew Scott, and had played a key role in the expansion of the company.

Most of the banks have security against property that is performing to plan, but the trouble has been the structure of the company - so complex that no one really knew who had security over which asset.

Centro’s argument with the bank has always been that any decision to put the company under would destroy significant value, including the roughly $240 million in funds management earnings.

This worked to a point, and the banks have agreed to a new December 15 deadline.

This will be the last extension, unless some progress can be made on the restructuring.

duriej@theaustralian.com.au

I know it doesn't mean much at Trading Halt. However, CER's indicative price is 42c, and CNP 48.5c at this stage.

What could that possibly indicate, I mean CER at 42c?

Lavender689 said:

I know it doesn't mean much at Trading Halt. However, CER's indicative price is 42c, and CNP 48.5c at this stage.

What could that possibly indicate, I mean CER at 42c?

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I don't know how you relate one to the other. The organisation with these is so complicated that I doubt if even the directors can fully understand it. I would say that the reason this business is taking so long is that the banks couldn't understand it either.

Position in the market is a good indicator for me as I am still in the high 280s with a sell order for CNP at 60c. It hasn't moved more than 4 places all day. I'm expecting it to have a sell result in the next day or two unless some institution has a lot more stock to unload.

Hi Lavender

CER was trading better than CNP because its debts supposedly were secured because they had direct property ownership over assets while the head company, CNP's interest in direct property is through the various layers of ownership at CNP. So CER was seen as a safer investment when it looked like CNP might go under as those who held CER shares were possibly more likely to get something back.

Now that CNP looks like it might survive, then its shares will probably trade better than CER. I think CNP share price before the plunge may have been as much as 3 times CER.

Time will tell whether the difference in the share price between the two increases.

Any thoughts on what the share price action will be on confirmation of the news?

Tulasi

Well its now officially on the Dow Jones news wires:

"MELBOURNE (Dow Jones)--Centro Properties Group (CNP.AU), the Australian property trust struggling to refinance A$6.6 billion in debt, Thursday won an extension until Dec. 15 from banks on a parcel of A$2.8 billion of debt that matured April 30, a person familiar with the situation.
Centro Wednesday halted trade in its stock and in Centro Retail (CER.AU), a property trust it manages, pending an announcement about the debt extension talks.
Last week the company was granted a seven-day extension to renegotiate debt and avoid bankruptcy. U.S. and European banks in February gave Centro until Sept. 30 to refinance loans on the condition that other lenders granted a similar extension.
-By Andrew Harrison, Dow Jones Newswires; 61-3-9671-4323; andrew.harrison@dowjones.com

(END) Dow Jones Newswires
May 07, 2008 23:22 ET (03:22 GMT)"

I think they will announce after hours though, I am hoping for a lengthy announcement.

CER announcement is good but same as before.

CNP well to say it has its hands tied behind its back and is drowning is an understatement. The extension is good, however the announcement realizes the seriousness of their predicament. The banks have put so many caveats into the agreement that any would be potential buyers just have to wait it out and get the properties that they want at fire sale rates.

ASX/Media Release

Centro Announces Extension of Financing Arrangements
--Australian Facilities & US Private Placement Notes
Extended to 15 December 2008 --

Centro Properties Group (Centro) announces that its Australian financiers and US private placement noteholders have agreed to a further extension of facilities until 15 December 2008.

The facilities are comprised of the following:
- $2.3 billion in aggregate owed to the Australian lending group; and
- US$450 million owed to US private placement noteholders.

In connection with these arrangements, Centro and certain of its wholly owned subsidiaries have provided security by way of fixed and floating charges1 and some US real estate mortgages to the Australian financiers, US private placement noteholders and US lenders.
The extension arrangements are subject to certain conditions being met by the following dates:

30 May 2008

- Finalisation of an additional liquidity facility as described below; and
- Finalisation of certain inter creditor arrangements between the financiers,
concerning:

If the above issues are not finalised by 30 May 2008, the further extension arrangements may be terminated. In such circumstances, the financiers would lose the benefit of the security which Centro has granted to them in connection with these extension arrangements.

30 September 2008

- The Australian financiers and US private placement noteholders being satisfied as to Centro’s progress in implementing its strategic plan; and
- The US lending group, which is owed in aggregate US$1.1 billion (A$1.2billion) associated with Centro’s joint venture with Centro Retail Trust (CER), agreeing to further extend those facilities from 30 September 2008 to a date no earlier than 15 December 2008.

The US lending group have confirmed their consent to the extension of the Australian facilities outlined above and have confirmed the extension of the US joint venture facilities to 30 September 2008.

If the above issues are not finalised by 30 September 2008, the extension arrangements may be terminated.

There is also information on any penalty interest and CNP have got extension with only an additional interest margin of 1.75% that was agreed to earlier. The additional interest on 6.6bln works out to be roughly 1 million per month. Reduces earnings per share by 2 cents so that is really not much of a penalty. So provided their businesses are performing well which is what the CEO has been saying they should be ok to meet their borrowing costs.

One of the conditions that was attached to their last extension was provision of a cashflow statement to all the banks by March 6. Surprises me that two months the banks would have had to look at that information wasn't sufficient and final agreement took another week.

Additional liquidity of 100mln needs to be negotiated by 30 May 2008 from US banks. This money is supposedly for capital expenditure, adviser fees and higher costs of negotiation. You have to wonder how much they are paying their advisers.

Does anyone have any thoughts on whether the announcement will have a positive impact on share price? My initial thoughts are that the share price will trade in a range of maybe 40 - 55 cents until May 30 deadline and might only track higher after that date. Would really appreciate hearing the thoughts of forum members following CNP. Thanks.

Tulasi

GEEZ, this is like the election in November, if you wernt watching tv for 4 hours and u turn the tube on it was a completely different world.

I been out, had a few calls and messages about it, come home and seen what we have at hand.

This is fantastic news. I was worried for holding a chunk of T3 CNP. IMO this extension has not been factored into SP, and we will see a steep rise over next week.

As far as i see it the banks are tied up, they want their debts bough back in place but they cant force centro into anything, as GR stated in his last webcast they are wounded, but will heal themselfs. this is true they ae buying so much time, its not funny. They even got more money off the banks. GREAT WORK TO THE TEAM AT THE GLEN, oh and Glenn. We have seen the day traders play this as a dead cat for so long now, and i strongly belive we will see the traders and shorters leave this now. there is 14 million short orders out ATM, and as far as i see it, they will be sh!tting themselves tonight massively as all us holders were last night with the unknown. i expect this to go up now, not to any silly figures like $5 but we will/should see a definate rise. IMO we will see go up down up down with a steady support between $1-$2.
Why? when this got dumped hard last year it went down and went over $1.50 with the thought of administration, now we can see that centro has the upper hand and the banks need centro alive as much as centro needs the banks we will see this ride out. announcement the other week said that it was not in shareholders interest to sell @ current offers (90c or whatever). We will see a run, as shorts need to cover themselfs (14million) and everyone who dumped last week getting onboard, as well as people feeling its safe again. IMO we wont see instos buying in yet as it is still all too risky for them, but will see a slight sell down as proft takers get on board, and see this repeat till it finds a new resistance.

This is my T/A and you should do your own research obviously, but there is not much to base anything on until the market tells us.

we saw FG run over $1 last week IMO this is a lot better position and company then AFG, although there is a lot more shares out there getting traded in CNP. Therefore we will probably not see the same run straight up.

GOODLUCK ALL CENTRO HOLDERS!!!!

Oh and congrats.

I totally agreed with Nathan, this is a big step up for CNP. They need to resolve the problem together. If it went down the hills, CNP or Banks would not get any better but worse .. IMO

The last few weeks, the investors/traders have been nervous abt the outcome of the extension, now everything is clear, the banks wanted CNP to be successful so that they can recover their money+interest... IMO.

Personally, I see it as a great news for CNP and its shareholders.

DYOR ...

Congratutaion and good luck - brave holders. You deserved it.

tulasi74 said:

Does anyone have any thoughts on whether the announcement will have a positive impact on share price? My initial thoughts are that the share price will trade in a range of maybe 40 - 55 cents until May 30 deadline and might only track higher after that date. Would really appreciate hearing the thoughts of forum members following CNP. Thanks.

Tulasi

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I doubt if it is in order to quote a price but you will see from my earlier posts that I have sell orders in for 60c. I have an average buy price of around 41c. I have one third of my shares for sale at 60c. I expect it to get to that and possibly more in the very short term based on how I see the news. When the next week is passed I hope to be free carrying the rest of my investment in CNP by selling as few more shares as possible. Personally I can't see $1 in the medium term unless CNP can make some very good property sales and reduce debt. That's my opinion but remember I am often wrong

Apologies that this post which hasn't any direct relevance but I just wanted to comment on how great I think this forum is. I haven't posted much as I'm not much of a share player....which is why it's so strange I too a huge punt on CNP.

On Wednesday night I almost wore out the refresh button looking for announcements and slept like a guilty gambler.

IMO, this is great news....when the AFR speculated on good news, before the 7 day ext. we saw that the market is on a hair trigger for good news & I hope this is still the case. I think there'll be a way to go before the real value of the SP is recognised as there is still risk ....but a lot less than 2 days ago and clear evidence of intent on the part of the banks..

I just wanted to thank Nioka, Tulasi, Lavender, Propergeez & Nathan for their excellent opinions and discussions over last months...I have really appreciated the analysis.

I'd be interested in how many are now looking to this as a longer term investment....ie past Dec.

Wilko, welcome aboard.

Forum is great it is a great scource of information and keeps tightly moderated for ramping etc...

I think you took a "punt" on CNP like the rest of us by doing your research and education on the company's strong fundamentals.

As far as holding, i will be dumping my T3 today or monday, and holding my main holding or part there of till the end.

Lets hope we see this puppy cut sick today and make us all have a much needed good weekend.

Cheers,
Nath.

You could very well see this stock tank today, again there are more sellers than buyers by a huge amount. All it will take is a few short term investors who were looking for a quick (AFG-like) buck to get nervous and start selling off cheaper.

All of the forums yesterday were hyping up the announcement and I hope everyone got out in the early morning. For all that has been said about the announcement, it was a huge disappointment and the fact that the caveats are their mean that the banks do not fully trust Centro to get through this. Thus no big investors coming in buying the shares.

i must also admit that this forum has given me great opinions to help me stay confident about this stock! THANKS

I am also new to stocks this is my first purchase and like many others I purchased it because I believe they were\are undervalued and that the risk of this company going belly-up was highly unlikely.

But I don't believe the extension was the announcement to set a wildfire to to stock increasing what will is when they sell a big asset with a good return on CNP (such as 50-50 sale) it looks promising that CAF may get a good deal within 30days, so we just need to wait

Its all good to get an extension but if you can't raise any funds then things will get ugly, cross fingers for good sale contracts on both CAWF and CAF with next 3 months this would put the SP on a rocket as then they have some good stability to manage debt!!

propergeez said:

You could very well see this stock tank today, again there are more sellers than buyers by a huge amount. All it will take is a few short term investors who were looking for a quick (AFG-like) buck to get nervous and start selling off cheaper.

All of the forums yesterday were hyping up the announcement and I hope everyone got out in the early morning. For all that has been said about the announcement, it was a huge disappointment and the fact that the caveats are their mean that the banks do not fully trust Centro to get through this. Thus no big investors coming in buying the shares.

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What has happened was to be expected. There were a lot of people expecting to trade this on the announcement. Most of the traders will accept whatever profit they can get and not hold out for the top price. A lot of traders would have bought in below 40c and will be boasting about their profit on the deal.

I have personally set a target price of 60c as I believe that is what the announcement is worth and I still expect to get there in the near future even if I would have preferred it to be today.

It is natural that the banks were tough, they take no risk and take no prisoners. The fact that the extension is there is proof to me that CNP have a future and that the banks must have faith in the management.

Anyone expecting instant wealth today were not living in the real world.

Slow and steady wins the race.

nioka said:

Slow and steady wins the race.

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If Centro had that as their business plan in the first place then they wouldn't be in this trouble! ;-) Thus it wouldn't be a buying opportunity.