Basically, as it was laid out yesterday CNP will cease to exist.
CER and its debt laden $7.3 billion properties will be rolled into a new vehicle with its major banking creditors as the major shareholders with the directors of Centro steering a new look property trust.
Ordinary unitholders in Centro Property Group (CNP) are potentially the big losers – a feeling that has grown on them over the past few years.
CNP unitholders are set to share $100 million from the carve up. However, they should start getting in the queue as it would appear that $100 million will be a ‘loaves and fishes’ deal.
There are 972 million shares in CNP – even if the entire $100 million was divided amongst those unitholders – which it won’t be, according to Centro directors – that’s just over nine cents a unit. They will probably be lucky to walk away with half that amount – a mere four or five cents.
CNP last traded at around 14 cents – 98 percent below the $10 it was trading at two years ago.
The once, more than worthless, CER shares may now be worth something if one can follow the diatribe spun out by the Centro directors in Melbourne yesterday.
But who knows?
The deal was eloquently summed up by the Australian Financial Review’s property guru Robert Harley who asked: “Is this deal robbing Peter to pay Paul?”
“Peter” being the ordinary Centro shareholder we surmise.
Centro directors hailed yesterday as a “momentous day”, but for whom exactly?
Certainly not for ordinary Centro unitholders who put have stood alongside Centro directors who have diminished the stock to next nothing over the past few years.
CNP and CER unitholders – a mix of mums & dads investors; pensioners and small institutional investors — must now pin their faith in the ongoing $200 million Federal Court class action to recoup their losses in a property vehicle that they have seen all but stolen from beneath them, but even then they will only get a pittance from the wreckage.
To repeat the quote from Centro chief executive Robert Tsenin “this is a momentous day for Centro.”
Well, yes at least he and his fellow the Centro directors who will continue to draw their huge salaries.
Quiet momentous, in fact.
Property Reviewer on Property Review
