It's an interesting scenario to play out.My personal...

It's an interesting scenario to play out.

My personal view/opinion is that the SPV's themselves have a value/price (particularly because they are effectively RTB (Ready to Build) and so therefore a raise at TopCo level will not be required. The value and price of that SPV is the NPV of a future set of cash flows which this '' preferred investor '' (and the banks) have been evaluating for some time. Black, green (GLCs), ACCUs, Gas etc can all be evaluated on the revenue side and then your opex = EBITDA / proxy for cash flow.

The other thing that comes to mind is DEL have proceeded down an SPV path using a Company structure. By using an alternative structure, i.e. Unit Trusts, you can gear up the SPV up on pre-tax cash flows (as CFADs will not incorporate any tax) which would allow you to obtain a higher gearing outcome (all else equal). Anyway, that detail is for another day.

The Preferred Investor will tip in X $ in to the respective SPV's to fund construction and in exchange for this DEL will be left with a residual ''equity carry amount''. This would be all part of the negotiations. The question is - is the construction of VIC1 and SA1 an equity only finance solution or is debt being dropped in on a pro-rata basis with equity from NTP (Notice to Proceed)? Generally speaking equity investors will require levered returns, and so this ''Preferred Investor'' is either taking the view of equity financing during construction and then re-gearing post construction (with more attractive debt terms likely) given the construction phase will have been de-risked) or they are looking to gear up from NTP.

To your dilution point - as at 30 June 2022 there were 215,720,915 million shares on issue. We have a current share price of 6.6c (as @ close 06/10/2022). As an simple example if DEL were to raise $5m at this closing price (to contribute to capex) it would need to issue another c.75m shares. Such an outcome would be unfathomable and surely the board know this and hence why heading down an equity carry position at the SPV level at least for VIC1 and SA1 makes more strategic sense. Hopefully they retain some flexibility on future projects and don't necessarily need to give up ownership of these.

jlJust my views and opinions. We'll soon know more.