As I had posted in response to another poster the debt being bought by hedge funds represents a nice yield based on the spread they are lending to buy the Centro debt.
The main thing I would be hopeful of is some sort of new deal on the debt coming up in 2011.
A smart move by Centro right now would be to get a deal on this debt during its' EOI process, thus changing the game for potential buyers. The assets are then not considered a distressed buy as the debt has been rolled.
Even though this business is riding a negative equity position I forsee a change in direction for property values in the mid December 2010 release of Sept quarter results.
Considering the level of interest in the assets of the business and the debt sell out the Hedge funds stand to make a massive windfall gain should they recapitalise and hold out for values to recover. Especially in a zero interest US lending environment.
Next stop roll over Dec 2011 debt and renegotiate the Debt fopr Equity deal based on revised property values.
CNP Price at posting:
15.5¢ Sentiment: Hold Disclosure: Held
