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Ann: Flinders secures $5 million loan facility, page-11

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pe981

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06/11/17

13:02

Post #: 28534254
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Originally posted by jake0002 ↑

one would presume that the Todd directors excused themselves from consideration of the loan, and voting on the loan? I presume they did.

On the surface
But have a look at the Events of Default
Just WHY would a Borrower exclude the ability to repay, or prepay the loan in such a manner?
The loan by Todd to FMS pretty much can only be repaid via R/I (in which Todd gets what 51%, and maintains its control - plus Todd can and probably will, increase its % via the R/I because not all s/h will take up their Rights. PLUS, Todd having control of FMS board, will be able to dictate the terms of the R/I)

So what happens if SP at/before 30 June 2018 is say 5c, but Todd causes board to offer R/I at say 7c - how many s/h would take up their Rights? not many I guess - so Todd takes up theirs, and increases it % shareholding.

So What happens prior to 30 June 2018, if example FMG (pick anyone) offers to take a Placement of FMS shares at say 20c p/s?? That might be hugely attractive for FMS, but not to Todd?

So what happens if FMG say, want to do a deal to Offtake FMS ore and blend with FMG ore? It says on "Arms Length Terms" - but whats that? Whatever, it allows Todd to argue and dictate the ability of frustrating FMS course of action.

Also, what about FMS' ability to do a transport deal?
what about FMS bringing in a Farmin partner?
All can be vetoed by Todd under Loan terms

I guess Todd having control - they can do that anyway.
But these conditions make it really difficult for the Board to consider alternatives in an independent way.

That's the problem with having NO director on the Board who was nominated by non-Todd shareholders.

Just observations

also- is this the purpose of the Preference share resolution? it would give FMS the ability to swap loan to a Pref shares. that gives Todd better hold on operation of FMS. Pref shares have different rights to Ord shareholders. separate class of share

Expand

BTW, meant to add. Agree with your comments Jake. Our majority holder certainly holds control and will preclude deals done without them. Certainly the loan does not allow it, but even aside from that our way forward is currently linked to BBIG and would be a major shake up to change that....

One thing though, not sure about your comment in relation to the event of default. Couldn't see anything untoward there??

FMS Price at posting: 5.9¢ Sentiment: None Disclosure: Held
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