Q, imo the key issue is the conversion price for the CN. According to clauses 5-7 of resolution 1 it is not simply a 30% premium to the SP on closing of the EGM date - it is the lower of that and 2 other monthly VWAP based pricing calculations that will be made each month when a payment is due. This to me suggests the same type of potential as a Springtree type CN - see the relevant sections highlighted in red below:
It is also worth noting the maximum dilution risk shareholders face is a conversion rate of 10 cps:
Imo we may well see 30 cps in the next 12 months if Track performance improves, but I now believe we will see it capped around that level due to the potential supply of CN shares (including the 5 million options JGB is getting).
I think this is an ugly beast & suspect in the end this will not be cheaper than the current 15% interest we are paying.
Cheers, Sharks.
CM8 Price at posting:
15.0¢ Sentiment: Hold Disclosure: Held
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