My take ...The $4.475m Convertible Notes (ASX 26/06/2020) went...

My take ...

The $4.475m Convertible Notes (ASX 26/06/2020) went to 36 sophisticated and professional investors, including $1m to Geoff Lord.

The recent CR is for a total of $7.391m, comprising an Offer ($6.355m 4:5 non-renounceable) and a placement ($1.036m) applied as follows:
- redeem Convertible Notes $4.475m
- future rental and business acquisition $2.400m
- costs $0.443m
- working capital $0.073m

The first question is why did Geoff Lord not convert his Notes at the "lower of 2.25c/share or the price of any equity capital raising within the two months prior ro conversion, subject to a minimum of 1.0 cents per share." Why would you convert at 1.0c per share when the CR is 0.6c per share? The same logic applies to the remaining 35 sophisticated and professional investors.

So Geoff Lord is using his redeemed $1m (plus other funds) to contribute to the Placement ($0.385m of $1.036m) and the Shortfall sub-underwriting ($1.0m). We do not know who is funding the remainder of the Placement - it could be the remaining sophisticated and professional investors or it could be some new investors.

The Offer (4:5 non-renounceable) is open to all shareholders on a pro-rata shareholding basis. If all shareholders take up the Offer, then the Shortfall underwriting is not required and Geoff Lord's 'additional' contribution is only the $0.385m in the Placement. My guess is that, in the current market, no one else wanted to underwrite the Shortfall Offer.

What are the consequences if shareholders do not take up the Offer?
- if there is no Shortfall sub-underwriting, then there is a risk not enough funds will be raised to redeem the Convertible Notes ($4.475m)
- if the Shortfall is sub-underwritten by a stockbroker, then the shortfall shares could be dumped into the market, depressing the SP
- if the Shortfall is sub-written by Geoff Lord, then his stake in BPP will rise to somewhere between 17.4% and 26.97%