The loan is repayable in full if the merger doesnt go ahead or...

The loan is repayable in full if the merger doesnt go ahead or by 30 June 2015.

The problem is ELK wont have cash to pay all of it back. So I guess it means that we, as you said, are stuck with this arrangement given we will essentially have an amount owing from an insolvent company given ELK only had $1.6m at the end of September.

Further, given this is no doubt a significant transaction, the MEL Board notes that "Metgasco has applied to the ASX seeking in-principle advice as to whether ASX will exercise its discretion to require Metgasco to seek shareholder approval to proceed with the transaction, and if so, whether ASX will require re-compliance with Chs 1 and 2 of the Listing Rules. Having regard to the circumstances of this transaction, Metgasco does not presently intend to seek shareholder approval unless ASX requires Metgasco to do so;"

Im not sure on what basis the MEL Board thinks something like this doesnt require shareholder approval or whether the ASX will provide the relief sought. Given the timelines for the deal stretching to mid next year, Im not sure you can justify this on the basis that time is of the essence. As also noted, ERM may have a view on this given they also dont have Board representation.

A further condition is MEL getting financing. Again this is light on detail as to how much is required. But clearly ELK is agreeing to this merger, at a discount to the last price as well, given there is still significant funding required to get Grieve to production. Nevertheless, at 7000bopd peak production, at a 35% JV interest, is not an insignificant sum, given a lot of the production costs are now sunk. Its just hard to work out just how this deal stacks up without details. The independent experts opinion should I think provide a lot more clues. I just dont know if MEL has really lobbed an opportunistic bid to a company desperate for funding or if somehow we are getting ourselves mired in US oil when I bought a NSW gas company.