Ann: Appendix 3B, page-11

Wow - great post Fish.

Just to answer that question. The Conversion to a Share means it is no longer a C- Note & no longer eligible for Interest but as a share is eligible for any Dividend applicable.

So if NAGs were declare the Intent to pay a 1c Fully Franked Dividend, then you would expect all the C-Note holders to Convert to Shares, forfeit the right to future interest and take a Divy instead (assuming the eligibility date for holding the shares hasn't past in order to be eligible).

Why would they convert, well a 1c divy on a share costing 10c = 10% but unlike the 10% interest payt it is fully franked, so it delivers a tax credit of about 42% (3/7).

Without complicating it, if less tax is paid on the Divy, it is more attractive then the equivilent 10% in interest. You would expect ALL C-Note Holders to convert if this eventuated. NAGs would then be Debt free as the money borrowed originally, is taken to pay the 10c shares purchased. A win-win, although it would mean the issue of new shares & that's the trade off from the Co' s perspective but still a good outcome imo.