· Leed is contributing A$1.2 million of funding towards a 4 year, A$3.25 million secured convertible note financing being issued by Battalion. The note has a 12% coupon for first two years, followed by two years at 14%, if not converted
· Battalion's major shareholders are contributing to the convertible note alongside Leed
· The convertible note benefits from a first ranking general security agreement provided by HM
· HM has generated monthly revenues of between A$1.2 million and A$1.5 million over last 6 months from which the interest can be comfortably serviced. The note is convertible into equity which would result in Leed holding up to 15% of Battalion, equating to an equity interest of 11% of HM
· If Leed converts its notes into equity, the conversion price will be at a 25% discount to the price at which Battalion acquired control of HM earlier in 2014 and at a multiple of approximately 1.4 times the current base case 2015 EBITDA HM forecast
· HM has a strong market position and is already producing positive operating cashflow
· HM fund raising will enable it to complete the transformation of its already established business
· Industry dynamics make for an attractive long term investment
Jeremiah. Great post. The BoD did say they had offers of a higher returns/higher risk investments, but had opted for a solid, lower risk investment after the Redmond/Manas farce. They want to build a good reputable company. This investment does not involve testing/speculation etc. We know the financial facts of what we are involved in. I must have missed the post where people thought this was a life changer/multibagger as I only saw one person project the sp going to 2p, which must have been a total guess with out facts (common on AIM!!!).. The main investors need the sp to get above 0.48 to break even, so I expect more to follow from the BoD.
All I have to say is. It's a slice of the pie in basic resources industry of the most sparsely populated country in the world that has been on the radar to exceed global economic forecasts. Any positive movement on the labour markets in Australia will have an effect on the investment
I'd say the BoD have played it safe in an uncertain market which may yet worsen before it improves. Lock in to a high yield as the macro global picture is threatening to implode whilst retaining the option to corner a portion of the target company at an attractive price should things start to look rosy again later. No sudden rockets but a steady, safe slow burner with future acceleration potential.
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