From the ASX PDF on Warrants
Rolling instalment warrants are a variation on the instalment structure. They have a much longer life (up to 10 years) but each year there is an annual ‘reset date’ when the holder will be charged another 12 months worth of funding costs. At this time the issuer may also adjust the exercise price (often called the “loan amount” of the instalment) with the objective of maintaining a desired gearing level (for example, the exercise price may be adjusted to keep it between 40% and 60% of the current market price of the underlying instrument). The issuer may either;
1. Reduce the exercise price (loan amount). In this case, holders will be asked to make an additional cash payment in order to reduce their loan and prepay their funding costs for the next 12 months.
2. Increase the exercise price (loan amount). In this case the issuer may make a payment to holders equal to the amount of the increase less funding costs for the next 12 months (this may either be in cash or in the form of a reinvestment in additional instalments).
3. Retain the exercise price (loan amount) unchanged. In this case the holder will be required to make a payment to the issuer for the prepayment of funding costs for the next 12 months. On the annual reset date you may choose to exercise some or all of the instalments and take delivery of the underlying securities, cash out the warrant, roll into the following year (by agreeing to pay any additional amounts necessary) or do nothing. If you do nothing you are deemed to have accepted the new exercise price and will automatically roll into the following year. If there is an amount due on a series on the annual ‘reset date’, and you don’t pay this amount, the issuer may terminate some (or all) of your instalments and use the proceeds to meet the amount due. Conceptually, these warrants can be explained as a series of consecutive one year instalment warrants with the exercise price being reset each year.
During the period surrounding each ‘reset date’, investors should take care to consider the effect of a change in the exercise price on the value of the rolling instalment. Information on an upcoming reset can be obtained from the warrant issuer or from ASX.