long term financing

The due date of the DI financing agreement has now been extended on two occasions, moving from the original 31 December to 31 March and now 30 April (per the December half year accounts).

Whilst I am confident Dr Len is moving towards finding an appropriate financier (whether that be DI or an alternative) I am interested in what terms might be agreed and the subsequent impact on the share price.

Needless to say an investment of the magnitude of the original DI MOU ($30m first and $250m second) will provide significant exposure and investor confidence. That said, the logical appraisal is equity only (doubtful that debt would be agreed until revenue was guaranteed) and at current price massive dilution is an understatement.

Taking the recent price of 6 cents, a raising of the first would lead to the issue of 500m shares, taking the total on issue to over 1 billion. With a steady stream of revenue this can still work, however you would suspect the share price would be weighed down by this until real income was achieved. Importantly I can’t see a price agreement much above the 6 cents, if that was the best result for 70m shares it could not be too different for a much larger investment.

I (still happily) exercised my significant holding of options late December so hope i'm wrong, noting I was expecting a slightly stronger share price for finance negotiations to reduce dilution. Interested in people's thoughts and maybe a different angle?