This was a convertible note negotiated with standard chartered,...

This was a convertible note negotiated with standard chartered, to be subscribed for at their option. They did not subscribe. SE subscribed instead.

A convertible note is a loan that can be repaid with a given number of shares at the option of the holder. The number is calculated with reference to the loan amount and the agreed strike price. SE had the option to take the cash or the shares. That is SE had the option to take USD$25m or 61m shares. (The strike price was A$0.50). SE took the shares despite the value of those shares being only US$11m-US$12m.

Given he put in US$25m, he could have taken out US$25m and used that US$25m to buy A$31m worth of shares - undoubtedly more than 61m.

So why would he do this?

1. he must have faith in the value and execution of his strategy as he is effectively reinvesting $17m cash.
2. he wants to show he has this faith - taking the US$25m in cash would have the opposite effect.
3. he can issue the shares, instead of standing in the market for them (he would struggle to get them all during the restricted period without pushing up the price)
4. I do not doubt SE's integrity (despite hopelessly optimistic completion targets) - but I would not be surprised if there was a deal done between the main shareholders and SE in exchange for votes at the AGM.

Is it good for the company?

1. cancelling A$31m of debt for A$13m of shares is a good thing in the short run.
2. if expectations were not so badly managed these shares may have been worth more, and perhaps the underlying value is more than $31m. I hope so (but am not holding my breath anymore) in which case SE got a good deal.
3. If SE stood in the market for $25m of shares he would have well and truly f*cked the short interest - which is a missed opportunity (if they didnt sue for market manipulation).