ttxpa instead of hdf, page-2

Market cap of TTXPA and HDF currently similar at c.$70m ea.

Under a bear scenario, TTXPA may convert into HDF at a low price (eg 10c). In this scenario, HDF will have a market cap pre conversion of c.$20m (ignoring performance fee shares). The face value of the TTXPA is $82.5m, so the market cap post conversion is about $100m. TTXPA investors will own 80% of the equity. They are not guaranteed of being able to exit at the price used to convert. They may only get 6.5c (say), leaving the YTM at about 10%.

Some comments:
- The TTXPA conversion is now on the radar screen as a potential concern for HDF holders. HDF likely to remain weak IMO.
- TTXPA holders benefit from asset sales (at reasonable prices), debt refinancing, or HDF price increases.

I am cautious until the situation stablises. Hybrid holders are risk adverse and do not like taking conversion risk when the headstock is trading poorly or when the hybrid has a large market cap relative to the headstock. In addition there has been very little volume in TTXPA since HDF started crashing. All this points to me to a weaker TTXPA in the short term.