Actually, I do not believe that they have interpreted AASB 9 correctly - however if they have - then its materially incorrectly presenting the NTA of the company.
Essentially they are representing on their balance sheet that they have a liability of 44million to Oaktree, when in actual fact, they have a liability 51.1 million liability.
Now the advice i have received is that when you implement AASB 9 correctly, if the share price was sitting at say $2, then yes, there needs to be an allocation for the Oaktree conversion equity and that should be valued at Fair value (using the methodology that they have) because the conversion increases the liability on the balance sheet of the entity. However the reverse does not apply, you cannot decrease your liability on your balance sheet because the share price has tanked - you still owe the money - the fair value adjustment is zero.
Seriously, the idea that this company's balance sheet looks better because Oaktree have the ability to convert their loan to shares at over 3 times the market share price is farcical.
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Actually, I do not believe that they have interpreted AASB 9...
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