I can't see an issue with the use of a convertible note. Lots of companies issue them, its a fairly normal function of the whole ASX etc so no cause for alarm that it is done as a note and not as straight equity.
As the terms aren't yet published I'll just be a bit more general in discussion, however the idea that interest is paid to an investor is not entirely correct. The interest can be "paid" by the company by the issue of a discount to the investor so no burden on cashflow. The conversion price can be set at a higher level than the current price that would have been achieved through a straight equity raise so that protects short term pricing of the company. There can be more than 1 trigger event for conversion so the length of time that a discount/interest accrues can land on the side of the company rather than the investor so that also protects pricing as well as dilution.
Most importantly from this whole raise is not just the quantum of money sought but who it is sought from. A raise can be a great way to introduce new, more strategic, money to the register. It must be understood that HMD is still very much in it's infancy and that without fresh funds the whole thing will stop, that is a widely known part of investing at this level of the market. If this wasn't listed it would be worth more than the market cap, the prices I see paid for medtech through VC channels is incredible. I have no doubt that this raise will trigger a sell down from disgruntled investors who are either unhappy not to be included in the raise or maybe don't understand what has happened, so be it. Personally I am scaling back 2 investments in VC opportunities to put into HMD as I am of the belief that we are very close to some sort of outcome. Either it's a massive tax-loss or the funds for the Tel Aviv booze fest with all the other double jabbed investors!
HMD Price at posting:
19.0¢ Sentiment: Buy Disclosure: Held
