Very pertinent point. I just re-read the Magna announcement (2015 I think was the first) and it seemed like a bad thing for shareholders. This is a summary of the loan that I found online:
The Magna Facility has a 24 month term from the date of each drawdown, is unsecured, bears no interest costs, can be repaid at any time by the company with a 15% premium.
It can be converted into NSL shares at any time by Magna during the term at a 20% discount to the 5-day volume weighted average price.
It's the last sentence that allows Magna to rip out shareholder value. They can convert NSL shares at a 20% discount, at any time during the term. Basically, they buy them at a 20% discount then immediately dump them on-market, obviously this is going to suppress the share price in a major way.
It reeks of desperation at the time it was negotiated, it was probably obvious to NSL that they'd never have the cash to pay the loan back (with a 15% premium!). And they'd exhausted shareholders with previous capital raisings and then failing to meet deadlines.
Thanks for pointing this out, two things need to happen, first as you say finish off the Magna fiasco and the dumping of their converted shares. And meet deadlines as announced. We wait, as always, but hope is more fleeting than in the past.
IOR Price at posting:
8.7¢ Sentiment: Hold Disclosure: Held
