Huntwicke Capital Group Inc (ID) HCGI

RE:Tony on BNN.

[JRaffles]

It was interesting to note that, by implication, Tony was ambivalent about whether a share price of $15 by June would be in the company's best interest.  At this price about $50m of Debentures would convert and dilute shareholders.

Tony seemed to be happy to pay off half of the debs in cash on maturity in June, as apart from Dec 2016 cash balances, KL will be generating high levels of every month in 2017.

The merits of convert or repay debs are finely balanced:-

1. If debs are converted at $15 in June 2017, existing shareholders will have received a 50% uplift from today's price.  Moreover, KL would have a huge treasury resrve which could be used for another higrade aquisition, thereby mitigating against the dilution factor.
2. A KL redemption of debs would keep shares at 200m undiluted and still be well funded for development etc.

In balance, my preference would be 1 above - Tony commented that $15 for ord shares would be good value for deb holders.