Ann: Notice of General Meeting/Proxy Form, page-13

Actually a very clever move by JC.

If the vote is approved he has 6 months to make the re-payment & knows exactly how much he will have to redeem (ie the maximum amount less any withdrawals that occur between 31st October & 31st March).

Noteholders would appear not to have the option of asking for redemption after the 16th October should 75% vote in favour of the resolution, thus they can't decide in Feb 2016 that they want to redeem the notes on 31st March 2016 (new reset date). So either have to sell in the market, convert or wait until the next reset date if they don't request redemption now.

This could cause a split within the ranks of the noteholders.

A year ago everything looked rosy, company had plenty of assets to cover all the outstanding notes, so there was virtually no risk for note holders.

Today its a completely different story, the company doesn't have the $$$ to cover even a 35% redemption and only has 2 properties left as assets.

Noteholders are in a very tricky position, if they don't redeem at this moment in time, then they are relying on this deal completing and the company using the funds wisely. They won't be able to redeem for a while. Whereas those that want out now (upto say the first A$16M) know there is enough cash/breitburn shares to get them all there money back. The others might be left with very little.

So the obvious thing for a noteholder to do (and for the record - I'm not one of them) is to ask for redemption now & if the deal goes through & the share price rises to the point its worth converting them into shares before 31st March is to do that and bank the additional profits.

However this also plays right into JC hands, should the deal complete, because either the notes are converted or the company gets to buy them back at par on 31st March. In the meantime JC doesn't need to buy back more shares, they can hold off until after that date, then start a buyback once there are far fewer convertible notes around.

They can also buy another asset in the meantime which will likely keep the share price from reaching full value.

LOTM