RE:RE:jv funding When the $10 million loan was issued and converted to shares immediately some asked why. I suggested that Cielo realized it will not get debt funding for the Edmonton plant unless it has more equity on the books. Since the lenders are also shareholders they went along with it. So why did they not do a straight equity raise in the first place? Because a convertible loan ranks ahead of equity holders in the event of trouble. They wanted to participate in the upside but at lower risk than shareholders.
lscfa wrote: Let's see how Ceilo does funding its Edmonton plant. This will indicate how RUEI may do. No damn way anyone lends Ceilo the entire $50 million. Project financing is usually 25% equity, 75% non-recourse debt.
JustLookn wrote: I'm with you citadel. I thought the jv deal was good a while back but I've changed my mind. If they need to wait until the tech is proven to raise funds, what good is ruei? At that point cielo could raise funds themselves. I think cielo has realized this and that's why future deals are cancelled. At least they have course corrected, mistakes happen.
We have to wait 60 days to see if the tech works, THEN see if ruei has money.
Many have said the jv are great because it avoids dilution. I thought the same IF they were raising money prior to proven tech, but no longer. What limited amount they contributed so far, we are giving up 50% of future revenue. To me that is much more expensive to shareholders than dilution. I haven't done the formal math but seems to me this should be easy to calculate if it was a smart move or not.
I raised these thoughts on another forum but did not get any support.