I agree with sinbin, if they could have financed with a high % of debt then they probably would have. Due to the tax advantage of debt and the reduced dilution. Debt should be used until the marginal benefit of debt (less dilution and tax advantage) is exactly offset by marginal cost (cost due to financial distress, risk of defult etc.) So either MF was worried about not meeting the interest payments (unlikely) or he was unable to obtain debt, and so looked at using con notes, and then finally ended up issuing ordinary shares.
Its all based on the Pecking Order theory of corporate finance.
Preferences:
1st Choice: Finance with internal funds
2nd Choice: Use debt financing
3rd Choice: Mixed instruments like Convertable notes (or similar securities)
4th Choice: Ordinary Shares
perkoa drilling comment, page-20
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