I am having trouble getting my head around the logic of this...

I am having trouble getting my head around the logic of this move but the notice says in part:

Principal Features Of Heads Of Agreement Signed On 26 October 2012
In consideration for MGL making a debt reduction of $2,000,0000 under the Loan Agreement and
issuing to SMM a Convertible Loan Note for $3,500,000, SMM will reduce the amount owing by
MGL under the Loan Agreement from $12,215,198 to $2,100,046.

It seems the net result is that our debt goes down about ten million, not the 2 million it says there.

Looks like SSM might like what is happening. Pity about dilution in future.