ttxpa instead of hdf, page-11

yes, the equity looks cheap at this level, let alone TTXPA. The attached article seems to confirm the view that cash payout of TTXPA is the company's preferred option.

Battle of Hastings as shares slideClancy Yeates
March 10, 2009
GROWING concerns that Hastings Diversified Utilities Fund will be forced to sell assets in a buyers' market have sent its shares to record lows.

Shareholders in the fund have endured a dramatic plunge in the value of their investment in recent weeks, with shares falling by nearly two-thirds in the past week alone, and more than 80 per cent in the past month. Yesterday HDF shares fell 34 per cent to a fresh low of 35c.

The company earned the ire of investors last Thursday when it slashed its dividend by more than half only one week after paying its Westpac-owned manager $18.4 million in incentive fees. Now the market is questioning its longer-term outlook in the difficult environment.

An analyst at ABN Amro, William Allott, said confidence in HDF management had been "shattered" and the fund had little option but to sell its assets to protect shareholders' interests.

"With a big question mark over the company's credibility, we struggle to see the share price recovering other than via an asset sales process," he said in research to clients. The note - titled "I'm no longer banking at Westpac" - downgraded the stock from "buy" to "hold" and slashed its target price from $2.05 to 55c.

Amid the global financial turmoil, investors are taking a bearish view on how asset sales may fare because past possible buyers of the assets, such as private equity or sovereign wealth funds, have remained on the sidelines. As one market-watcher mused, "the big question is, who's looking to buy at the moment?"

The assets HDF could sell are a 50 per cent stake in Britain's South East Water and its Epic Energy pipeline business, valued at about $800 million each.

Infrastructure companies that are looking to sell assets include the debt-laden Asciano and Babcock & Brown Infrastructure, which have endured falls in their market value of 91 per cent and 96 per cent, respectively, from last year's peak prices.

Mr Allott said if HDF could not organise a sale by the end of this financial year, the fund might cut its distribution to nought, compared to the 12c a share it now pays.

Shareholders are also increasingly concerned their investments could be diluted by the company's obligation to investors who bought $110 million in hybrid notes in 2005.

Mr Allott said that if it could not arrange asset sales before June 2010, the company would not be able to buy out the noteholders, and could be forced to dilute existing shareholders by issuing 200 million new shares.