Oh then I retract that, if they can convert at any time from...

Oh then I retract that, if they can convert at any time from August (with say a months time lag), then indeed they have almost as much flexibility as we do to cash in on higher share prices. And we may also get diluted over the next 5 years if they convert early. I've thought it through even further and I actually think we've done ok out of this, with one question to clarify which may not make that much difference, whether noteholders conversion price gets adjusted by franking credits on dividends?

If I can sum up then, in any scenario where the share price goes above $2.10, the noteholders effectively become equivalent to shareholders with a buy in price of $2.10 as of today (or a couple of weeks ago), less 2.75% interest. The noteholders effectively receive the dividends if the share price is above $2.10, as it reduces their buy in price by the amount of the dividend (I assume they don't reduce the conversion price by the franking credit amount as well, at least we have that). sab8, can you confirm about the franking credits, whether they are factored into the conversion price calculation? Assuming they are not, if we make a broad assumption that franking credits over the next 5 years will be approximately equal to the interest on the notes of 2.75%, then noteholders are approximately equal to shareholders in an above $2.10 share price scenario where they have effectively purchased at $2.10 (so a little worse off than equity holders say buying on market today), however below $2.10 share price I think shareholders are better off, down to the raising price of $1.68. Below $1.68 noteholders (potentially) win, depending on the level of dividends paid, really only in a no to low dividend scenario at $1.68. However in a high dividend scenario, say $1.10 in dividends is paid over the next 5 years, shareholders I think would still come out ahead of noteholders at a $1.68 share price. This would make the conversion price for the noteholders $1, so noteholders would receive $0.68 in equity gain on conversion, but they haven't received $1.10 in dividends over the 5 years (remember I've assumed their 2.75% interest is equivalent to the franking credits we would receive on our dividends), and equity holders will have lost circa $0.20 in equity compared to todays price, so the purchaser today on market has still come out ahead. In this same scenario if the share price really collapsed, this is where noteholders can start to come out ahead, at the point where equity holders (dividends received - equity loss) is less than zero noteholders will always win as they get their capital back.

I think this is ok after all, at a share price above $2.10, we've effectively done an equity raising at $2.10 which is above today's share price, below $2.10 we've raised equity even more cheaply or it remains a debt instrument depending on dividends, until the price point where equity losses > dividends, where this always becomes a straight debt instrument at 2.75%. Hope my logic is sound, think it is, but poke holes in it. Assuming that the funds will be invested wisely, I actually don't have a problem with the way it was raised now that I've thought it through.