There is nothing to stop the company just buying the hybrids on...

There is nothing to stop the company just buying the hybrids on market. If payment was being made on them (as is presently the case) at the current low security price they are retiring around $3.30 of debt for each $1 outlayed and internalising by purchase, a running yield of 24%.

As to how much they would get is a different matter and until they resolve the whole issue, the hybrids overhang the market and render the ordinaries fairly useless and worthless.

They cannot pay a dividend until two distributions are paid. If they pay a distribution, then the hybrids have value and for a new entrant a highly attractive yield. If they don't then the ordinaries too are stymied and in a world of no dividends.

I think they will step up and then they have the right to suspend payment of the distribution. In due course they will recommence payment and dividends will start again.

Really, they need to bite the bullet and put up a proposal to deal with the capital structure once and for all. Putting up a Scheme of Arrangement with the hybrids cancelled at say $60 might see the requisite 75% vote in favour and then the issue of paying ongoing distributions and the threat of dilution of the ordinaries goes away.

But this requires some thought and positive action by the company, and nothing of that nature has been forthcoming for a long time.

There needs to be a circuit breaker rather than the company weighing up the alternatives within the current security structure.

But if someone wanted an equity position in the company, going in via the hybrids has an attraction: they block dividends, rendering the ordinaries pretty worthless, and a non cash alternative for the company might be to allow dilution in which case the holder ends up with a large number of shares based upon the $100 face value acquired for $29.

And if they don't dilute, then one day distributions need to be restarted to pay a dividend, in which case the yield is very attractive.

All in all, it's an interesting situation!

Lizard.
*******