Drillsearch's new growth and Horizon Oil, page-6

Nice post mongy TU from me and good insights and comments from Nailbiter, ronstieb and co. Had a quick look at the posts in DLS and came across this one which caught my interest.

speculator101 15575904: Interested to hear others thoughts? As for HZN - crazy idea, too much debt for DLS to take on with its convertible notes.

Convertible bonds (CB). I’ve posted before that I know nothing about them. It seems speculator 101 is implying they are problematic in zone way. It got me thinking, are they the reason for the decline in the share price? Any gurus out there that can offer some insight would be appreciated?

To start things off here’s a bit of research below re CBs

From Horizon Oil web site - Investor presentation June 2015

(p2) At 31 Mar 2015:-
Cash on hand US$39.4m
Drawdown on US$150m RBL facility US$110.0m
Convertible bond (listed on SGX) US$80.0m (matures June 2016, unless converted prior
Net debt US$150.6m 1.7 x 2014A EBITDA
1.8 x 2015E EBITDA

(P3) Convertible bonds 400 Convertible to 488.998 ordinary shares per bond at the adjusted conversion price of $0.409

03/06/11
HORIZON OIL ANNOUNCES SUCCESSFUL COMPLETION OF BOOKBUILD FOR US$80
MILLION CONVERTIBLE BOND ISSUE

• Successful bookbuild for US$80 million convertible bonds issue

SYDNEY: Further to the announcement dated 2 June 2011, Horizon Oil Limited ("Horizon Oil")
(ASX: HZN) is pleased to announce today that it has overnight priced a US$80 million convertible
bond ("Convertible Bonds") issuance.
The 5 year Convertible Bonds will be issued with an initial conversion price of US$0.52, equivalent to A$0.49 based on exchange rates at the time of pricing, and representing a conversion premium of 29% to Horizon Oil's last closing price of A$0.38 on 2 June 2011. The initial conversion price is subject to adjustment in certain circumstances. The Convertible Bonds will carry a coupon of 5.5% per annum.
There was strong demand for the convertible bonds from a broad spectrum of investors across Europe
and Asia Pacific.
Horizon Oil's Chief Executive Officer, Brent Emmett, said, "The success of, and demand for the
convertible bonds points to the quality of Horizon Oil's suite of operating assets and near term
development projects whilst also diversifying Horizon Oil's funding sources. This transaction will
fund the acquisition of Petsec's 25% interest in Block 22/12, which includes a 12.25% interest in the
WZ6-12/12-8W oil fields development and the incremental development costs to first production
scheduled for late 2012."

Unless previously redeemed or converted, the Convertible Bonds will be redeemed at 108.8% of
principal on 17 June 2016. Horizon Oil has the right to redeem all outstanding Convertible Bonds at
their Early Redemption Amount on or after July 2014 if the Horizon Oil share price exceeds for a
specified time 140% of the Early Redemption Amount divided by the Conversion Ratio

I note Horizon’s share price began the fall from grace post July 2014!!! Is that ie. CBs, the smoking gun we are dealing with here? Cheers, M1