Papyrus Raises $500,000 in Unsecured Loans with Convertible Note Option
Papyrus Australia has arranged a further $500,000 in unsecured loan facilities from four sophisticated investors, with conversion to unsecured convertible notes subject to shareholder approval at the 2026 AGM.
- Additional $500,000 unsecured loan funding secured
- Loans accrue 1.5% monthly interest and convertible to notes
- Shareholder approval required for note conversion and broker options
- Funds to support commercialisation and biodegradable product contract
- Broker L39 Capital to receive cash fee and options
New Funding Boosts Papyrus' Commercialisation Drive
Papyrus Australia Ltd (ASX:PPY) has secured an additional $500,000 in unsecured loan facilities from four professional and sophisticated investors, extending its recent capital raising efforts. These loans bear interest at 1.5% per month and can convert into Tranche 2 Unsecured Convertible Notes, contingent on shareholder approval expected at the company's 2026 Annual General Meeting.
Loan Details and Investor Composition
The loan agreements, each up to $125,000, involve investors including Maryton Australia, Antanas Guoga, the Muchnicki Family Trust, and the Roseman Retirement Fund. Notably, Muchnicki is linked to a related party of Papyrus, triggering specific ASX Listing Rule requirements. The company can draw down funds on request, with lenders obliged to provide funds within five business days.
Convertible Notes and Shareholder Approval
Upon shareholder approval, the outstanding loan amounts plus accrued interest will convert into Tranche 2 Unsecured Convertible Notes at $1.00 per note. These notes carry a maturity of two years and an interest rate of 1.00% per month, with conversion prices set to provide early conversion incentives and protections against share price volatility. Conversion shares will rank equally with existing ordinary shares, and noteholders will receive options exercisable at $0.015 per share, subject to approval.
Broker Fees and Option Grants to L39 Capital
L39 Capital, which introduced the lenders to Papyrus, will receive a 6% success fee on the gross funds raised under these loan agreements, payable in cash. Additionally, subject to shareholder approval, L39 will be granted 8,333,333 options exercisable at $0.015, expiring three years from grant. This arrangement follows L39's recent engagement to lead Papyrus' capital raising activities.
Use of Funds and Contractual Commitments
The newly committed funds will accelerate Papyrus' commercialisation activities and support delivery under its contract with TBS Mining Solutions for manufacturing biodegradable variants of their patented Collar Keeper® products. This funding injection comes as Papyrus refines its product following recent trials and adjusts supply milestones accordingly, aiming for commercial supply from November 2026 and scaled volumes by March 2027.
Bottom Line?
Shareholder approval will be pivotal for Papyrus to convert these loans into equity-linked instruments, shaping its capital structure and funding runway as it advances biodegradable product commercialisation.
Questions in the middle?
- Will shareholders approve the convertible note conversion and broker options at the AGM?
- How will the conversion terms impact Papyrus’ share capital and potential dilution?
- Can Papyrus meet its revised supply milestones for the Collar Keeper® contract with TBS Mining Solutions?
