First Samuel clients have invested in a 3 year convertible bond. This bond will pay 9% p.a., and can be converted into either shares (at 80% of the price set by an initial public offering [IPO]) or brought back for cash at 1.15x the current face value (a 15% capital gain).
This bond will provide further growth funding to allow Mr Rental to accelerate its plans in advance of a potential IPO in the next 1-2 years. Should this occur, this note will be converted into common equity. We see strong incremental profits available from this funding, which will improve the profit of the business and therefore its value.