The issue price of ~1.1c is at a discount to a Volume Weighted...

The issue price of ~1.1c is at a discount to a Volume Weighted Average Price (VWAP) see link below.

Simply….The cheaper the sp over xx days,the more discounted (#1) shares they get for the dollar and visa versa, the higher the SP over xx days the fewer discounted (#1) shares they get per dollar. Generally it means that they don’t loose, especially with a falling sp as they can take cash or convert the “loan” / “pre purchase” to shares at anytime and always at a discount to the current SP.

#1 - See the basics of the deal as announced for the discount.

There is a very unflattering Nickname for this “style” of finance.

This is a long way from being the worst deal that I have seen.(IMO)


In my opinion they would not convert any of the “loan” / “pre purchase” into shares unless they thought they had or there will be a market to sell into.

Eg: Sell into, say >=1.3c for a ~>18% return before costs (if any) for a matter of months outlay. So can we expect a half decent announcement soon?

[Note - From memory KFE paid them $160k in shares for the privilege of this deal.]


vwap

https://www.investopedia.com/terms/v/vwap.asp