I think I was not that clear in my earlier post where I said worst case dilution could be 150 million + 57.5 million + 141.5 million = 349 million shares.The 150 million shares were for expenses of $300 million to get to production.The 57.5 million shares were to cover the cost of repaying the Dec. 2013 convertible.The 141 million shares are to cover the principal repayment on the July 2013 note payable to related third party.Al could extend the maturity once again on this note, but he could also further dilute.
I did not factor in the 2015 convertible since the conversion price is $6.80, making conversion a positive event.Since the Aug 2015 maturity date is far enough in the future, hopefully its redemption can be covered by cash flows or by a new debt offering.
Since the shelf offering is for up to $500 million, perhaps this signals that Al will extend the maturity of his loan again.
I rechecked the 10-Q; I have the conversion prices correct with the 2013's converting at $22.47 and the 2015's converting at $6.80.
And, you are correct that i did not include dilution from warrants.I was only looking at dilution from the maturing convertible, from the note to related third party, and from future expenses.However, dilution from the warrants, depending on the strike price, will raise cash and reduce dilution pressure from other sources, although I don't know by how much.
I also think that it is likely that they issue convertible notes or issue stock, rather than by borrowing or issuing non-convertible debt.Would you lend money to a risky enterprise if you didn't get to participate in some of the upside?The debt holders are taking almost as much risk as the equity holders.
