Ann: POSCO Downstream Joint Venture Transaction Completed, page-28

If I’m reading it correctly … happy for others with more experience in this space to correct …
1. POSCO pays PLS the approx $80M in exchange for the convertible bonds.
2. PLS uses those funds to pay for its share of development costs of the JV facility and in return gains 18% of shares in the JV entity.
3. Interest payable on the approx $80M is set at 1.5% above RBA official interest rates.
4. I think repayment of the $80M plus interest is due only at end of bond maturity date (5 years) but PLS can elect to pay earlier in at least $5M amounts (plus interest on those amounts I assume).
5. PLS can elect rather than to repay the bond amounts to convert the bonds to ordinary shares based on a 7.5% discount to VWAP AT TIME OF CONVERSION (not at time of issue of bonds). Now I assume that means say shares are VWAP minus 7.5% of $5 and say 80M convertible bonds were issued, it doesn’t mean the bonds each convert to one share and thus POSCO takes a 500% gain but rather the 80M bonds can be converted (at PLS election) to 16M shares (plus more to account for the accrued interest). If I’m correct then future potential dilution of share value is less the greater the PLS SP increases in the meantime.

In addition, yes spod sold to the JV is sold at commercial rates and the last announcement on the POSCO JV project confirmed an increase in the spod offtake to I think 315ktpa - so more security of sale of spod and this time to a JV where PLS will share in the profits of conversion of spod to LiOH.

And then there is the ability for PLS to elect to increase its share of the JV to 30% (additional 12% acquisition), the price of which is fixed at cost price for the JV up until qualification of the LiOH for battery use and then at fair market value (we get to see that it all works as planned before deciding to get further into that game).

And finally, if PLS want out of the JV they can do so by selling back to POSCO at the same price we paid - there’s a time limit to that but I think it’s based on some period after ramp up has been completed.

All-in-all a most compelling deal I feel.

Anyone care to confirm if I’m correct on the above or not?