gvander, actually, if we assume that VLNC can get "material" orders by 1/27, then the cash flow analysis does come through. They need to recognize $4 MM to get the first chunk of funds from the IDB (Irish Development fund?), and after that the line of credit over for the next four year (actually, these might be grants rather then loans, or possibly combination of the two) can increase to another $39 MM if my reading of the last 10Q are right. On top of that, they have commitments to expand the current $7.5 MM floorless to $15 MM, and access to an additional $7.5 MM from Berg ($2.5 MM already taken down and, of course they have to meet certain milestones). All in all, if they indeed get a major order and actually get into production they have line up finance for working capital of about $60 to maybe $65 MM. That can support annual sales (as far as working capital is considered and using 30% of annual sales as WC requirements) of close to $200 MM without too much of a problem, and if they show just half that sales rate, I think they can get more traditional financing.
The point is that if they meet the 1/27 deadline and their production can be ramped up without too many hitches, they have the financing in place. You must be careful and see what all the "what ifs" are (commitments are not always money in the bank, unfortunately, as I have learned the hard way in one new venture I am involved with), but you got to admit that from a financial point of view, they are ready to roll.
I cannot comment on the sales, marketing and production facets, but if they have control of these as they have of the lined up cash, they'll be OK (once more, if they get through the January event unscathed and delivering from both barrels).
Zeev |
