Question
Consider this agreement and the information, and find out if this is a good deal or not for the company, and why. Set up a
Consider this agreement and the information, and find out if this is a good deal or not for the company, and why. Set up a timeline of how the payments can be made and how expensive this loan will be for the Company. What other factors or degree of factors can make this one; 2: good deal for the company. 2: Bad agreement for the company where the share price drops considerably. A company named "Dundar Productions" has entered into a USD $7,500,000 unsecured convertible loan facility (the "Facility") with a consortium of institutional lenders (the"Lenders"), to provide additional funding for the Company's development. The Facility includes an initial immediate advance of USD$2,500,000 (the Drawdown). The Company has the right to draw down up to a total capital exposure of US$2,500,000 every 4 months from the Lenders. Each Drawdown has a repayment term of 15 months, of which the first three months of repayment holiday, and the remaining twelve of equal principal instalments. The Company shall pay interest on the outstanding amount of the Facility at the rate of 7,9% per annum (the "Interest Rate"). Under the terms of the Facility, the Company has issued the Lenders with 7 million shares (6% of the current number of shares), share purchase warrants (the "Warrants") to subscribe for the equivalent number of common shares of no par value in the share capital of the Company ("Common Shares") at a price of USD$0.55 per Common Share for subscription at any time, with a 24-month term from the date of issuance, and subject to the articles of the Company and the terms and conditions of the Facility. During the term of the Note, the Lenders may, from time to time, elect to convert varying amounts of Principal and Interest of the Facility. Half of each Drawdown may be converted at 120% of the relevant Reference Price, and half at 145% of the relevant Reference Price, the Reference Price being the average of the 15 daily VWAPs, on the stock exchange, preceding each Drawdown. The Lenders have trading restrictions meaning they cannot sell more than 10% of monthly volume for the duration of the Facility. No conversions will take place for the first 2 months following each relevant drawdown. Conversions are restricted to no more than 30% of each Drawdown for the first 4 months. An application will be made for any Common Shares issued and allotted on exercise of the Warrants or Conversion to be admitted to the standard segment of the Financial Conduct Authority to trading on the local stock exchange. The new Common Shares will rank pari passu in all respects with the existing common shares of the Company. In accordance with the terms of the Facility, repayment of each Drawdown can be made in cash (Cash Repayment) for a charge of 2.5% of the relevant Drawdown amount outstanding.
At current time, Dundar Productions is traded at USD $ 0.40 per share, average daily turnover is USD $ 1,200,000, So average trading volume is 3 million shares per trading day, and this is also the average trading volume each trading day.
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