Ann: Notice of Annual General Meeting/Proxy Form, page-63

According to my calculations (in pre-consol terms):
40,000,000 shares @ 0.039 cps = $1560.
(i.e. 0 039 was the issue price of the loan funded shares which equals $0.78 in the new).

Neat trick for RT. Assume a buy back price of $3.

If he paid out the loan his nominal profit would be (2,000,000 * 3) - 1560 = 4,440,000

If the company buys back pro-rata shares to pay out the loan, guess what, it is still the same.
2,000,000 minus the 520,000 bought back equals 1,480,000 left @ $3 equals $4,440,000.

So RT retains the same nett worth without having to put up any funds.

Perhaps not so neat a trick for the company. Talking in the new. They are buying back (an expense) 520,000 shares @ $3 per share ($1,560,000). They issued (income) those same shares for $0.78 each.($405,600). A nominal loss of $1,154,400. (Of course this CASH loss for the company entails a reduction of 520,000 book shares.)

Not a great trade IMO. [In % terms sorta mirrors many of mine].

Another way of looking at it (which gives the same answer) goes like this.

Scenario A: Company issues 2m loan funded shares @ $0.78, which when converted brings in $1.56m.

Scenario B: Company issues 1.48m loan funded shares, which when converted brings in $0. (i.e. the .52m loan funded shares not converted have cost the company $1.56m in revenue or $3 per share.

Under A, any non converted shares will cost the company $0.78 per share in revenue, whilst under B they will cost the company $3 in revenue. Therefore, .52m non converted shares will cost the company a difference of $2.22 per share with A compared to B. ($1,154,00). Same answer as above.

Summary: RT comes out square in nett terms but does not have to provide funds to repay the loan, company loses $1.56m cash benefit whilst shareholders gain approx 0.5% less dilution.

Perhaps I should have just provided the summary, because now my head hurts.