Just retiring debt. Debt that is in part provided by directors....

Just retiring debt. Debt that is in part provided by directors.


That is not an accurate assessment of what is happening.

The fresh equity capital that was raised is not being applied to settle director loans.

In fact, in relation to director loans:

A. One tranche of it (a very significant quantum of US$22m (A$32m) is effectively being forgiven (well, it has been converted to options whose exercise prices are between 3.6 times and 8.7 times the current share price, leaving them so far out-of-the-money (25c, 40c, and 60c) that it is tantamount to forgiveness), and

B. Another tranche - the lender is an entity associated with a director - amounting to US$17m (A$25m) is being exchanged for a Capitalising Converting Note with an exercise price that is some 45% above the current share price.


But rest assured that none of the funds raised last week are going to redeem director debt.


"Not clear enough how this benefits the shareholder."

Not only is this highly beneficial to shareholders but as a wholesale capital re-construction and re-capitalisation exercise, I'd go so far as to say that it is totally transformative and is the most seminal moment in the company's colourful, but unhappy, history.

After this exercise, in terms of being able to have a crack at succeeding, the company is in the best position it has even been. In several aspects.

That doesn't guarantee success, but if greatly enhances the odds of it.
(The feeling in my bones says that there is now a 65%-75% chance of success over the next 18 to 24 months, compared to maybe 15%-25% if this medicine hadn't been taken.)

And in the event that they are successful, the share price will be several multiples higher than it is today (I can easily envisage those 10c directors' options coming good. Heck, maybe those 25c options will end up in the money. As for the 40c options, well, that's a whole new story...)
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