If I was a debt provider, I wouldn’t be giving away a concession that is effectively saying “if my fee shares, which is my upside to this (risky) deal, go up in value, you can pay me back less than the face value on my debt”. I think it’s both an acknowledgement that the upfront fee shares are being issued on the cheap (20 day VWAP is ~8c) relative to intrinsic value, and that GXY will pay out this debt when they announce a funding deal on Sal de Vida.
I think that provision is more about protecting OCP from the possibly of the shares falling, not increasing i.e. If the shares fall, OCP will want more cash repayment - or in the worst case - a larger chunk of the collateral/assets.
The point about financing Sal da Vida with debt while OCP hold liens over all the assets is one I had not considered.
GXY Price at posting:
8.3¢ Sentiment: Sell Disclosure: Not Held
