The doldrums have happened after a strong wind blowing the OGC...

The doldrums have happened after a strong wind blowing the OGC price upwards. All stocks require consolidation particularly after inclusion in major indices.

However, the con notes are interesting. There are effectively two tranches. The first - $A55million @ 5.75% maturing 22/12/12 at a conversion of $A4.16. However, the holder can put the note for redemption on 22/12/2010 - this means they are classified in the accounts as current. The second tranche of $A100 million is redeemable on 22/12/2013.

Much of these funds are locked into Didipio project.

So the question is the put option for the first tranche on 22/12/2010. OGC have the funds to pay out this tranche but it would impact on their capital management for the Didipio project. Perhaps OGC are waiting to see how the note holders opt before finalising Didipio.

The note holders receive around 24 cents pa interest whilst equity holders receive zero cents. Thus with a 30 cent difference in current prices from shares to notes there seems to be an incentive to hold. Note holders also have a free call option for two years on an OGC share price above $4.16.

The OGC share price in December 2010 is really the key.