Highlights

  • Papyrus Australia (ASX:PPY) has secured commitments for up to $500,000 through four Unsecured Loan agreements.
  • Each of the four lenders has committed up to $125,000, with interest accruing at 1.5% per month until repayment or conversion.
  • Subject to Shareholder approval, outstanding loans and accrued interest are expected to convert into Tranche 2 Unsecured Convertible Notes.
  • The funding will support commercialisation activities, delivery of the Company's Collar Keeper® contract with TBS Mining Solutions and Working Capital requirements.

Papyrus Australia (ASX:PPY) has secured a further $500,000 in funding through four unsecured loan agreements with professional and sophisticated investors. The additional financing comes as the company progresses commercialisation activities and works to deliver its contract with TBS Mining Solutions for biodegradable Collar Keeper® products.

Four Lenders Commit Additional Capital

Under the new loan agreements, Maryton Australia, Antanas Guoga, J G M Investment Group as Trustee for the Muchnicki Family Trust, and Davsam as trustee for the Roseman Retirement Fund have each agreed to provide Papyrus with up to $125,000.

The combined facilities provide Papyrus with access to as much as $500,000, with the company able to request all or part of the available funds. Once a funding request is made, the relevant lender is required to advance the requested amount within five Business days.

The loans are unsecured and carry interest at 1.5% per month until they are repaid or converted. Muchnicki is controlled by a director of L39 Capital, which is a related party of Papyrus, while the other three lenders are unrelated to the company.

Proposed Conversion Into Convertible Notes

Subject to shareholder approval, the outstanding loan amounts, including accrued interest, are intended to convert into Tranche 2 Unsecured Convertible Notes at $1.00 per note. The notes would be issued within 10 business days following the required approval.

The proposed notes would have a two-year Maturity from their Issue Date and carry interest of 1% per month. Accrued quarterly interest would generally be capitalised unless Papyrus elects to pay it.

The conversion structure provides different pricing mechanisms depending on when a conversion occurs. For conversions within 12 months of issue, the conversion price is set at $0.009 per share. After 12 months, the price would be based on 80% of the applicable five-day Volume weighted average price, subject to a minimum of $0.0075 and a maximum of $0.009.

If the notes convert into ordinary shares, noteholders would also be entitled, subject to shareholder approval, to one option for every two conversion shares issued. These Options would have an exercise price of $0.015 and a two-year term from their grant date.

Shareholder Approvals Required

Papyrus intends to seek shareholder approval at its 2026 Annual General Meeting for the issue of up to 535,000 Tranche 2 Unsecured Convertible Notes and 8,333,333 broker options for L39 Capital.

The Muchnicki-related conversion requires approval under ASX Listing Rule 10.11, while approvals under Listing Rule 7.1 are being sought for the proposed conversion of loans involving Maryton, Guoga and Roseman. If approval is not obtained by 1 December 2027, outstanding loan amounts and accrued interest would become repayable under the relevant agreements.

Funding to Support Commercialisation

Papyrus intends to deploy the new funding toward its commercialisation program, including delivery of its contract with TBS Mining Solutions for the manufacture and Supply of a biodegradable variant of the patented Collar Keeper® product.

The company also plans to use the capital for working capital requirements. The funding therefore provides additional resources as Papyrus progresses its operational activities and seeks to scale production associated with its commercial agreements.

L39 Capital introduced the four lenders under its existing engagement with Papyrus. In connection with the funding, L39 Capital will receive a 6% success fee, excluding GST, on gross funds received under the loan agreements. Subject to shareholder approval, it will also receive 8,333,333 options exercisable at $0.015 each and expiring three years from the date of grant.

Conclusion

Papyrus Australia's latest financing provides access to up to $500,000 through unsecured loans as the company advances its commercialisation program and production commitments. The proposed conversion into unsecured convertible notes introduces a defined financing and potential equity-conversion structure, while shareholder approvals remain an important next step. The funds are intended to support the Collar Keeper® contract, broader commercialisation activities and working capital as Papyrus develops its operating platform.