Ann: Response to Media Article, page-4

Where there’s smoke there’s fire. I find it hard to believe that the AFR would just make this up out of thin air. We know that they were planning a CR as they were finalising the SocietyOne deal, but instead went with a $25m loan from PEP at high interest. Now there are debt covenants attached to that loan and the other $50m PEP facility they have. Now we haven’t been told the details of these debt covenants, are they linked to market capitalisation/share price? If so that’s a huge concern as the share price has dropped from around $1.70 to 70c in that time, and if the debt covenants are linked to share price then PEP may be close to calling the debt in. I watched Babcock and brown go into administration in 2008 when their share price was dropping inexplicably down to a point were debt covenants were breached and they didn’t have sufficient cash to pay their debts and administration ensued. The question here that management need to clarify is what are the details of the debt covenants and what conditions will trigger the need to quickly repay the debt? It would be prudent( but painful for shareholders) to raise cash now to avoid that potential situation. For that reason I tend to believe that the AFR article may have some truth to it.