Ann: India Project Funding Strategy, page-79

Archer – I hope p2p is right and that I am way of the mark. But good luck. And here’s for a green close.

Squeef - The purpose of the debt facility is to prevent dilution, something the Company says is in the interests of all shareholders, and that is generally true. If there was no debt facility, and if the Indians were to accept the 10% offer, then obviously the register would swell with options to fpo conversions as the sp would likely exceed the floor price, imo, as the market would see this investment as a tremendous commitment and belief in the technology. But even if it didn’t exceed the 3.3c, there would still be a MASSIVE incentive to convert anywhere over the OBs exercise price.

I don’t believe the company would want that kind of dilution. And I don’t believe the Indians would buy 10% of a fully diluted register.

The current funding through debt means that the company does not need, nor does it desire, options conversions from retailers that will dilute the register. They don’t need that money or the dilution it will create.

So if the purpose of the EFH (and Brevet) is to keep the register from further dilution, then it would be in the interest of all (long-term) shareholders not to let the sp run up to the Indian floor price as this would trigger conversions with the consequence of diluting the register. To repeat, this strategy of keeping the sp capped at say 1.5c would also be consistent with Company policy of not diluting the register and looking after the interests of long-term holders.

The interests of the EFH participants is therefore, imo, not in the interests of the retail option holders, but it is, prima facie, in the interests of long-term shareholders.

Hope that helps.