I have not had time to read the entire agreement, but according to the 8-K the conversion to preferred has to be triggered by a change in control.
From the 8-K:
"The Facility is unsecured, but upon certain triggering events generally described as changes in control of the Company, loans under the Facility are convertible into shares of a newly-designated class of the Company’s Series A Preferred stock"
The question is, what is a triggering event and how is change in control defined. Other provisions may come into play as well. So in other words, it will be treated as a loan unless there is a triggering event. The default language will also be important.