There has been a lot of 'belly aching' about the convertible notes...the way I see it, if management organise a bid the convertible note holders are extinguished for 28.9m shares...not bad...KBL will have satisfied $13m debt for 28.9m shares.
I don't see the note holders as being an issue...
See the following excerpt from the quarterly report;
The Company is currently working closely with the Convertible Note Trustee to best deal with the expiry of the $11.2M (issue value) in notes (ASX code KBLGA) in February 2017. Under the terms of the notes, they need to be repaid by this date, or alternatively, conversion is deemed to occur if a takeover occurs prior to the February expiry date. What this means is that under the terms of the notes, the 28.9M notes will be deemed to convert into 28.9M shares if an off-market bid, a market bid, scheme of arrangement, or offer or invitation is made to all holders of Ordinary Shares is made and the offeror has at least 50% of the voting power or the Directors issue a statement recommending that the bid, scheme or offer.
Without an alternative arrangement being made, given the current share price of the company, if a takeover was made and the above conditions were met, this could lead to a considerable loss by Noteholders. For this reason, the Company is working with the Trustee to identify ways in which to manage this situation to arrive at the best solution for both shareholders and noteholders.
KBL Price at posting:
1.2¢ Sentiment: Hold Disclosure: Held
