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$5.28 galaxy resources limited

Ann: Corporate Debt Refinancing, page-22

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dirko

19 Posts.

17/11/15

17:20

Post #: 16416791
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Originally posted by invertedva ↑

Hi Dirko,
You say:

If I was a debt provider, I wouldn’t be giving away a concession that is effectively saying “if my fee shares, which is my upside to this (risky) deal, go up in value, you can pay me back less than the face value on my debt”. I think it’s both an acknowledgement that the upfront fee shares are being issued on the cheap (20 day VWAP is ~8c) relative to intrinsic value, and that GXY will pay out this debt when they announce a funding deal on Sal de Vida.

I think that provision is more about protecting OCP from the possibly of the shares falling, not increasing i.e. If the shares fall, OCP will want more cash repayment - or in the worst case - a larger chunk of the collateral/assets.

The point about financing Sal da Vida with debt while OCP hold liens over all the assets is one I had not considered.

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Appreciate your thoughts invertedva, but read the sentence again:

"as well as any gain in value of the Galaxy shares"

I'm going to take the wording at face value - I don't think it's misleading (otherwise it would have read "as well as any change in value").

GXY Price at posting: 8.3¢ Sentiment: Hold Disclosure: Held
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