Ann: Transaction Specific Prospectus - Exposure P, page-2

re: Ann: Transaction Specific Prospectus - Ex... These Convertible Preference Shares don't look like great value to me.

Shareholders get to buy the CPS at 3cps c.f. the current share price of 1.2cps. Given the CPS convert to ordinary shares at 1 for 1 on 31 Dec 2016 and would still have to be sold to liquidate, then the share price probably needs to triple by then simply for the CPS holders to get their investment money back... may be better to try and buy the shares now if one has that kind of faith?

The CPS have the right to a dividend of 8.5%. However, it seems this is not compulsory and the right to it lapses after 20 days of late payment. There appear to be very few consequences to the company for non-payment, other than the right of CPS holders to vote during that 20 day period (not long enough to organise much!) and the inability of the company to pay ordinary holders a dividend for 6 months (it would be surprising if the company felt pressured by this!). If there are other compelling consequences, I have yet to notice them.

Perhaps the best outcome is to forgo the possible dividend and convert early - early conversion yields requires obtaining a form from the company to convert, so get in early and ask for one in case it takes a while to get there! Converting on the day of allotment would give 3 ordinary shares for every CPS, presumably falling to 2.5 shares if the form gets in a day late... But at 3:1, there might be a possibility of selling them on market at around current price and getting a small gain for the effort.