Sorry, you missed my point. The Chairman owns 4.7% of the company now. He is also contributing 4.7% of the convertible loan. In the event that the company defaults, the lenders (including the chairman) get the company's IP. Hence, as a participant in the convertible note issue, the Chairman guarantees his continued ownership of 4.7% of the company's main value. So, for 200,000 pounds he protects his existing ownership going forward.
I am not talking about relative percentages of ownership in the event the notes are converted to ordinary shares. The real risk here is that the company will either default on a quarterly interest payment or not have the cash to repay the loan in 2016.
CFU Price at posting:
4.6¢ Sentiment: None Disclosure: Held
