Audalia creates $5 million debt-to-equity pathway at 3 cents

AUD$5 million debt conversion option agreed

Audalia Resources Limited (ASX:ACP) has created a potential off-ramp from AUD$5 million of debt, with Executive Director Siew Swan Ong and shareholder Yek Yek Ong given the option to convert their loan facilities into shares rather than receive repayment in cash.

The arrangement is not automatic. It requires shareholder approval at Audalia’s upcoming annual general meeting, and either lender can elect to convert only if the relevant facility has not already been fully repaid.

Conversion price set at 3 cents

Under the variation deeds, Ong can convert the AUD$3 million facility into 100 million fully paid ordinary shares, while Yek Yek Ong can convert the AUD$2 million facility into 66,666,667 shares. Both facilities carry the same conversion price of AUD$0.03 per share and the option remains available before the 15 July 2028 repayment date.

That price matches the issue price of Audalia’s August share placement, which raised AUD$450,000 through 15 million shares. It was also 36.4% above ACP’s last closing price of AUD$0.022 when the announcement was released.

Potential relief for repayments, potential dilution for holders

If both lenders exercise their options, Audalia would issue 166,666,667 shares and the corresponding AUD$5 million of debt would be settled through equity. That could reduce the repayment burden attached to the facilities, but the announcement does not disclose Audalia’s current shares on issue, so the eventual percentage dilution for existing shareholders cannot yet be calculated.

The proposal also leaves the outcome uncertain in two directions: shareholders must first approve the arrangement, and the lenders may ultimately choose repayment instead of conversion. The next material steps are the AGM vote and, if approval is secured, any decision by the lenders before the 2028 repayment deadline.