AGM and BFS, page-419

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HAC30

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26/11/18

08:33

Post #: 36635679
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Originally posted by mbomb ↑

You really only need to look at 1 page. The first page of Annexure A

Now we all know about the commencement fee shares, the collateral shares, the options and the 90% conversion price (with no floor). Those were stated in AUZ's announcement. Along with minimal dilution and no interest.

What the terms and conditions say:

$4m buys Bergen 4300000 convertible notes, each with a face value of $1. So suddenly that $4m investment is now $4.3m (but hey its not 'interest'). Thats a bit misleading and not included in original announcement.

The maturity is 2 yrs. The story being told is hey we get $12m (8+4m option) for 2 yrs interest free. The shares will convert at a 90% price.. thats not too bad right? placements are normally bigger than a 10% discount. Sure there are fees and stuff but such is life.

now Bergens first $4m is $4.3m. (hey lets just ignore all the other shares and options issued to them for the time being). That deal was announced on the 11th of September. Its been less that a qtr and theyve converted some shares. 300/4000 = 0.075. Lets say for a qtr.. even tho its actually quite a bit less. Thats a 30% effective interest rate.Then you have to consider the fact they get a 10% discount on the conversion.

But thats not it. If you look at the terms and conditions you will notice that they can choose the VWAP of 5 trading days out of the last 20. Not even 5 consecutive trading days. If they had to go to AUZ and say ok today we are going to exercise give me 90% of the VWAP of the 5 previous trading days that would be bad. This is worse

Did you ask yourself how the f@#$ did the appendix 3B have 3c a share? its trading at 4.6 and its been hammered from 6c? Simple. Bergen chose days 20 19 18 17 16 ago when the shares were trading in the low 3s. When the share price appreciates as it has in this bounce. They get to say give me those prices from 20 trading days ago.. and as we all know 20 days is a long time in the spec space. Bergen will likely convert further shares in the case of any appreciation

You want to get out of this deal? Bergen can elect that 30% of notes not be redeemed.

What possessed the company to agree to this?

Expand

Bergen deals are all like this. Not sure how much more this information could have been spoon-fed since the announcement by various posters.

Upon saying that, I think most people get caught out not understanding convertible notes without a set conversion price the first time we see them. Its all one big learning experience.

AUZ Price at posting: 4.6¢ Sentiment: Sell Disclosure: Not Held
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AGM and BFS, page-419

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