'Tis indeed the time to be jolly and there is nothing like...

'Tis indeed the time to be jolly and there is nothing like having a chuckle at those things in the bottom left hand drawer way way way at the back...

In mine is a small parcel of AJA ...

My goodwill thoughts on what's ahead in 2012...pure speculation of course!!!!

The immediate issue is resolution of short term debts re JPTD (May 2012) and JPTA (August 2012). Gearing ratios an uncomfortable 94% and 135% respectively, both with a common lender. As a portfolio the lender is looking at a gearing ratio of 112%...not a comfortable position.

As a backdrop, the world economy will slow IMO ... to me the its a simple chain reaction ... the USA slows, Europe slows, Asia slows and no amount of internal prosperity in China or India will be enough to save AUS... I think this will deliver a weaker AUD but a stronger JPY (flight to safety) ...AUDJPY rates then to at worst bubble around current levels.

I think AJA have a cash squeeze in the immediate horizon (3 ~ 7 months) ... the hostile lender will look for every opportunity to build a negotiation position. Early exit swaps will cause some cash tension IMO and the threat of security deposit recalls should AJA default will at a minimum be a distraction, at worst a cash drain. Directors suggest none of the above are real threats but I suspect they understand that at times you don't know what you don't know... I suspect this will create some price volatility (aka trading opportunities IMO)

The lender knows that without any meaningful medium term prospect of valuation recoveries that his LVR has tanked. In 2007 during the good ol' BNB endless amounts of other peoples monies, the valuation of 2 properties in JPTA were probably 18Bn yen... today the same buildings are about 9.1Bn yen... o dear! On this refinance the lender must recognise a write-down of somewhere between AUD50 ~ 60M to stand at valuation... This bodes well for AJ in as much AJA doesn't need to finance 18Bn yen against an asset returning on 9.1Bn yen ... great outcome...

IMO AJ will need to find circa AU$50M to at least complete the recapitalisation of JPTD ... there is equity, it is in the attractive retail sector so why not ...

If the lender were smart he'd bundle the two.

Things to look for:
1. A capital raising ... best guess AU$20M
2. Extending on existing other facilities eg JPT, JPTS ... plenty of room
3. Working capital ... will mean screwing over interim distributions... o dear
4. maybe some cross guarantees .. certainly JPTD & JPTA but possibly broader ... I hope not

IMO exchanges rates in short term will deliver some goodwill and merriment ... but you need to be a believer... I am and think that AJA will target a 15% yield and therefore distribution 30 cps...wishful think possibly?

All of the above pure speculation ... DYOR