"Hey madamswer, can you remind me who holds the notes? Is it...

"Hey madamswer, can you remind me who holds the notes? Is it just Anacacia? Or are there other holders too eg Microequities? "

I'm not sure who holds all of them, but Anacacia speaks for the bulk of them.

By my interpretation of the following, of the outstanding Notes that are convertible into 28m shares, Anacacia would speak for 22m of them:



"However, having structured quite a few con notes in my time - from the investor perspective - it’s quite likely the con note holders have the right to elect to convert or redeem the notes - not the company. So the noteholders are no doubt quite happy to continuing receiving their 8% coupon (if paid in cash) or PIK interest capitalised on the notes as it’s money for jam. "

I'm no fan of convertible notes; in my experience they are fiscally punitive and are normally reflective of a sort of near-desperation for funding on the part of the entity issuing the notes.

And yes, you are right; the conversion election lies with the note holders (but in terms of redemption, the information issued by the company that I've seen is silent on that prospect.)

By the way, subsequent to the 31 March 2020 balance date, the note holder agreement has been revised with amended terms (see my previous post).


"Also, I didn’t realise we were expecting a receivable from the noteholders on conversion? Typically the way they work is the $ is lent upfront (ie already funded) and then the liability is extinguished once they are converted (or redeemed and paid out). I certainly wasn’t expecting more $ to come in from them, just dilution...?"

Yes, you are right, but I did not mean to suggest that the liability is extinguished AND they get cash coming in the door.

The way my financial model works is it reports all free cash flows to a single Net Debt line, so to reflect the reduction in the liability, I have to enter a $7m "cash receipt" in my spreadsheet, the effect being to reduce the liability without any cash coming in.

A modelling idiosyncrasy.

Sorry about the confusion.

.