david thodey, and deena shiff email, page-34

Hi Ewob

Enjoyed your posts and you pose a good question.

I am a business banker not an investment banker and I have a range of clients with the largest being property devlopers.

Regarding PIE's options, there is a good chance debt funding is viable in certain areas assuming there is a solid contract which banks can satisfy themselves that PIE can execute to ensure uninterrupted cash flow to service the debt. Banks will look for things they can obtain effective security against such as stock and debtors (hopefully Telstra) to fund at least some portion of working capital requirements during the build phase. Equipment finance would also possibly be available to fund any plant/production line expansion (if applicable).

I don't think your average bank would be interested in funding longer term capital requirements yet as the market cap is too low and the daily trade not providing effective liquidity. A merchant bank or venture capitalist could fund this aspect however this may be a less attractive option than a capital raising which may include some incentives for loyal holders. If we did have a cap raising you would hope it was at least via a renouncable issue so those without cash to participate can at least sell to cover some of the dilution cost.

Another option to raise capital could be some seed capital from Telstra by way of an advance or sign on payment as part of the possible agreement.

The last one is via a JV with Telstra funding capital requirements for the JV entity. Not really sure about the likelihood of this and any discount PIE would accept to the agreement as compensation. Maybe someone else could expand on this option.

I think there is a chance it might be a mix of all of the above at differing stages, as timing is a big issue. With a bit of luck or good management maybe we could get through the next 3-6 months without a cap raising and at that point the SP is a lot higher making dilution impact minimal.

To directly answer your question (as opposed to the above ramblings), I would hope we do not have more than a 5% dilution. By issuing 50M shares on top of existing 1B shares @ say 10c would raise approx $5M. The assumption is that all going well we have cash flow to come & possible longer term debt funding. I would also hope any cap raising would include all shareholders and be at a discount significantly higher than the dilution percentage.

Good luck and bring on Monday!!

Cheers

TT