The only shareholders who can participate in the second round, are those who fully subscribed in the first round (so, those who contributed the $58K in cash and converted the $1.2M in debt, IF that represented all their subscribable shares, which were 50% of what they owned on the record date (Dec 2008?)).
Second round participants can then say how many shares they want; if the total requested is less than the 116M still available, everyone gets what they want. In the delightful instance that the total is more than 116M, they are allocated pro-rata according to request.
This second round concept was set up from the very beginning, an intelligent decision by the company.
In terms of Mr. Bendall's role:
- The company has announced that all Directors took up their full allotment; Mr. Bendall is a director, so he took up his full allotment.
- He is therefore eligible to offer to buy as many shares as he wants; specifically, 116M for $8M.
- However, in the most recent EEGC press release, his quotation did not include a reaffirmation of his intent to buy all unsubscribed shares, but instead the PR spoke about ongoing talks to find investors.
Those two facts cause me to believe that the $50M LOC so loudly trumpeted last summer as the financial basis to buy all unsubscribed shares, which would be enough in $ terms to meet the spending requirements of the new lease, does not currently exist.
Per the PR, the second round (oversubscription period) will not resume until the registration statement is declared effective by the SEC; not sure what has to happen for that to occur, perhaps someone can comment. I would speculate that the halt in the second round was caused by the company's failure to file financial statements in a timely manner; as they are now filed, hopefully the SEC will move quickly.
Net: As a long, I HOPE Mr. Bendall will meet his commitment, but the evidence I see is not encouraging. The precipitous drop in PPS since first round results were announced suggests that the overall market is assuming RO failure, with any possible subsequent financing -- if available at all -- resulting in severe dilution (current market cap is less than $6M).
