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Redfrog So, in summary, you want to raise $30million of debt...

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Al99

2,629 Posts.

677

13/10/14

17:28

Post #: 14117740
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Originally posted by redfrog ↑

The posts for Jake and others about debentures or convertible notes etc should be looked at right now. I floated this idea some months ago on this site and only Doc at least gave it an airing . I am involved with a Mining company who issued Convertible notes some time back. It worked for them to get over the hill and I’m still pulling
10% interest which gets me over $100000 per year from them. Following is a copy
of what I sad then:
“Here we are with the SP flat as the proverbial with a Board who is quite capable of being very successful if they had the cash for new drilling and necessary upgrading of the Gas Plant. To get Empire moving ahead what can be done to stir the pot?
The old Board ran the business year upon year for their own benefit. IE: Burn cash, flog cheep new shares to SI mates. Then burn cash again etc etc. As a result Empire is saddled with a huge share price negative, brought about by the existence of 6 Billion plus shares on the Empire register.
A consolidation is inevitable sooner or later. Even though some poor initial results can occur, the longer term result in this case I believe would be very successful.
Using 6 Bil as a nice round figure, a 20 : 1 example would push the current 0.009 SP up to 0.18 and leave us with 300 Mil of shares on the register. That number would be a far better starting place to improve the share price and for raising capital.
So many point to what most of us believe is Empire’s strong position in the Perth Basin. All we need is cash to exploit that position. Say 30 Mil to drill a well or two and upgrade the gas plant. Even with a consolidation the punters are plain sick of forking out more cash with no return. Rather than that, there are other ways to get the share holders to contribute more cash by giving them some incentive.
How about Empire making a Convertible Note issue. Probably you know how they work but the following is a rough example assuming it follows the consolidation mentioned above.
Say Empire issues its shareholders seventy five million CN’s (EGOGA) at 40 cents each to raise 30 Million Dollars. The return in the notes is between say 8% and 10% PA on the issue price with distribution every six months. The great attraction of this is the shareholders are earning a very good return on their investment rather than waiting for capital gain or divs on ordinary shares.
The conversion event is determined by a preset share price market level of the EGO shares. With conversion for example the Deed might say they can be converted when EGO rises to 30 cents. That would net you 1.333 EGO’s for each EGOGA you converted. Buybacks are also possible if set up originally In the trust Deed. CN’s would not be controlled by Empire. They are controlled by a independent trust and changes cannot be made except via voting by the CN holders. Convertible Notes can be listed on the ASX.
Naturally what ever you invest in there is always a risk. It’s up to the investor. Convertible Notes are no exception, particularly if the old Board was running the Company. It is only the facts that we now have what appears to be a viable Board running Empire that I suggest the above Consolidation and Note Issue as a possible way to quickly exploit what I believe is a rare opportunity.”
I’m 76 and tired and Doc is up to his neck getting over the hell he suffered for EGO. I’m sure some of you younger guys could put your heads together meet with the board and get them to get the trust deed provider on to it. All share holders with a workable number of share holdings would be eligible. I have about 20 mil EGO ordinary shares and would buy $100000 worth of Notes. Any pushing I could do I would but I’m too old for heavy organising.

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Redfrog

So, in summary, you want to raise $30million of debt funds and go and explore in the Perth Basin. What happens if the wells are dry?? How do you repay the notes??

Secondly, where do you find the funds for the $3million of interest ($30million at 10%) that is payable on the notes?? The current cashflow would not support that.

You would need shareholder approval to issue the notes as they would be converting into greater than 15% of the current issued capital.

Should I go on?????

DYOR

Cheers, Al

EGO Price at posting: 0.6¢ Sentiment: Hold Disclosure: Held
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