At first glance it seems a little preposterous to talk about selling $50 million in stock when the entire market cap is less than $10 million. To do that at these prices they would have to authorize a lot more shares and it would mean lots of dilution, including so much the top executives share of the company’s majority ownership might begin to come into question.
For those reasons I think it’s obvious this deal shows their confidence that the stock price will rise, perhaps greatly so over the next 5 years which is the time frame of the deal. At $20 a share or $40 a share they could raise a lot of cash for a realitivley small dilution outlay.
The deal provides for needed funding, while still leaving open any opportunities to borrow money instead if they choose to do so.
An S-3 sell would be preferable, to sell outright and avoid the investor discount, but the value of the public float is not large enough to qualify yet, except for a baby shelf which limits the amount.
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