I agree the terms of the financing will be revealing.
Fred has posted that the 10K shows a shareholder willing to loan $20M; I don't believe this true. I just read the entire 10K again on Friday, planning to prepare a post on the financing. Unfortunately SEC Edgar was down yesterday, and doesn't seem to be functioning properly yet today, so I can't cut and paste the relevant sections. But the company has had an outstanding loan offer for some time from a shareholder to the tune of $10M, and this offer is good until 2002. The interest rate was 8.5%, about one percent above that shareholder's credit line. Furthermore, they have a $2M credit line that hadn't been drawn on as of March 31, 1998. They should have received $2.5M from Delphi in June, so I add up about $14.5M in available funds, with no dilutive impact.
It will be interesting to see the terms of the financing, but I'm feeling more and more that my conservative estimate of 20% dilution is too high, and wouldn't be surprised to see the dilution at less than 10%. Financing seems to be an big issue with many, so if the dilution is less than 10%, then I wouldn't be surprised to see a 20-30% pop in the stock price upon announcement of the financing terms.
After the financing announcement, we should get the JunQ earnings report and probably another conference call by August 14 at the latest. Has anyone heard when Valence plans to announce the JunQ earnings?
Paul |
