Ann: Two Wells Online as Vali-3 Commences Gas Production, page-78

Two points:
- 10% is a low figure for financing of this nature, especially given that there was no production history of the reserves (the collateral) at the time of the deal. I haven't seen an arm's length deal in this sector in recent times that significantly beats it.
- Saying they don't need their shares is like saying that you or I don't need ours. All decisions by them and by us as individuals are based on risk matrices. It's just that Keybridge likely has stronger internal rules than an individual, given they are a fund. i.e. exposure to a single asset of no more than x of the fund. No doubt they've black scholed the options, applied a weighting to the loan and reduced their direct equity exposure proportionally.

Just because it's not great for individuals with a short term outlook doesn't mean the company made the wrong decision in who to attain loan funds from. From the MEL perspective they're likely looking at it as their last instance of capital raising, with dilution of only circa 15%, versus a discounted cap raise that would've seen 25+% dilution. Sure it'll cost $1.5m+ in interest and other, but that's a one off cost to the balance sheet, versus expanding the capital structure of the company permanently.

In KBC's position I'd be selling off circa half my holding to reduce my exposure. Nothing that they've supported the company consistently when it comes to raising capital. They're cast as the bad guy, but really don't seem to have done anything nefarious to me... especially given the size of their MEL exposure relative to the fund size.