gnspa showing 66 pct per annum return to sep08, page-9

PP
No. The "Step Up" simply means that if Gunns choose to do nothing, they must start paying a coupon that steps up by 2.5% from October. i.e. the margin over BBSW increases by 2.5%.

So that is one option, Gunns hangs onto the notes and pays an extra 2.5% taking margin to 5.0% over BBSW as you point out at end of your message.

That brings the options down to two others:
- issuer exchange pure and simple
- re-offer (which we as noteholders can reject and get either issuer exhange or step up)
- holder exchange (not a realistic option as you get min conversion)