gnspa showing 66 pct per annum return to sep08, page-8

Thanks W...I'm getting clearer on this: A couple of questions if I may.

"Step Up"..is this the lingo for "the company will make a cash payout of the FORESTS($120m)?" If YES, I agree with you; why would they want to do this in a higher interest environment.

That brings the options down to two:

Convert FORESTS to HNS and the formula is $100 divided by the VWAP less 2.5% = ord shares issued

So, this means that if the VWAP was $2.40...then we would get 42.735 shares (being $2.40 less 2.5% = $2.34 divided into $100). Is this how you see this?

The Re-Offer I am all at sea with.

Can you explain how the following would work in a practical sense?

"If Gunns does not Exchange FORESTS on 14 October 2008 the Margin will be increased by a one-time increase of 2.50%, expressed as a percentage per annum, until FORESTS are Exchanged unless a successful re-offer is executed."

You see, my understanding is that presently the "margin" of 2.5% is the excess over the official 90 day interest rate and it sets the quarterly coupon return.

So, does the "one time increase" mean the margin goes to 5% above the official? In which case, this too, is becoming expensive funding.