I posted this on TOB:

Conversion Price is $47.10 (13.3% premium to ATH) and interest rate is 1.75% p.a. (existing credit facility is 8%, increasing to 9.5%). There are conditions whereby the Notes could be converted (by Noteholder) or redeemed (by LAC) early, although it’s not entirely clear to me what those conditions are, and how they operate.

If converted with Shares, dilution would be about 4.4% (incl. accrued interest). This (potential) dilution is somewhat offset by 1) substantially lower interest costs for 5 years and 2) greater cashflow/funding flexibility going forward (unsecured Notes replacing secured Credit Facility, removal of obligation to use C-O free cashflow to repay Credit Facility). There might also be some benefit in LAC being more financially “independent” from Ganfeng (and Bangchak).

This is a good result. LAC operates in a capital-intensive industry. Raising capital at the right time and the right price should never be taken for granted. When low cost capital is on offer, it is always wise to take it!

I think the market should like the deal, but we might need to be patient. The offer closes on/about Monday and only after that will JE hit the airwaves to promote the benefits.

Would love to know what others think.