Ann: Notice of Annual General Meeting, Proxy Form & Annual Report, page-9

Replying to sab8

I see the Notes like protected shares that have essentially already been issued - they just have downside protection insurance as a Note Holder, collecting the 2.75% interest (and deferring their collection of dividends).

If NHC issued this as equity in June, those new shares would have been entitiled to the dividends anyway but NHC would have paid the costs of a cap raise (probably at a discount anyway).

I see it as a quick way to get upfront cash without a cap raise while providing the NoteHolder with downside insurance - it is the reasoning or the good rate of 2.75% (nothing is for free).

Maybe it is a simple view but it is how I have distilled it for my decision making purposes.

This cash is likely to be deployed in an accretive aquisition (maybe) - I think it is about optonality atm and the ability to move fast and opportunistically.

While it will look like a big deal at the eventual conversion date, the NoteHolders (think protected shareholders) are not receiving the dividend payments until they convert ... so in 2026 (or earlier) when they do this, they are collecting on something they were entitled to anyway.

While this can be spun this mnay ways, the effect of this transaction is:
- fast access to $150 (up to $200m) in cash
- a rate of 2.75% for a few years
- new equity issued (delayed effect)

Also, I do not think they get any interest on the dividends they are deferring which further reduces the net interest paid to them.