Mystic, with DPDW I simply said financing in place so by that I only mean financing that is already in place and not something that is currently being worked on. I'm nearly CERTAIN they are working on the financing currently. With what they have in place, they have less than $1 mill left on their current credit facility to borrow against before hitting the upper limit.
I'm sure they have some decent residual money rolling around from stuff like the Series D conversions:
In January and March 2008, Deep Down issued 25,866,518 shares of common stock to the holders of 5,000 shares of Series D preferred stock. The Series D preferred shares had a face and liquidation value of $5,000 per share and were convertible into common stock at a conversion price of $0.1933 per share.
So that is about $5 mill. But that still leaves them well short of what is needed to hit the $23 mill area for the buyout (plus they are chewing up some cash IMO thru operations, with interest/principle payments being the big eater).
And the lender is probably thinking about the shares/dilution and prior terms this company has shown/agreed to with their acquisitions (IMO) wanting to make sure their (the lender's) side of the equation is worth the risk.
That could mean worse terms to shareholders in that the amount needed for this acquisition will exceed what was needed for Mako so I would venture a guess the lender will want even better terms (scary to me, but to each their own opinion).
$23 mill is the takeover amount approx. So $5 mill from the conversion of series D shares at about $0.20 per common share, then maybe $1 mill from their current facility. So they still need about $17 mill roughly IMO... But that would burn up all their cash so they'd probably need slightly more than that.
Considering the dilutive financing that happened on Dec 21 07 included almost 5 mill bonus shares to the lender at about 40% discount to then current market prices, I'd be a bit worried about dilution as a shareholder but that's just me (that would equate to bonus shares this time of maybe $0.48-$0.49 or so per share to the lender- I'd watch real carefully how long the lockup window is on those bonus shares if there is one too, I haven't looked into it since I don't own DPDW currently).
The closing price of the common shares back then (when the Mako financing was done) was in the $0.9s so near today's price level of about $0.9 and the lender got the bonus shares at about $0.51 a share so a steep discount to what was current share price back then. I would think something similar might happen with this latest project/acquisition because of the amount the company needs to raise to make it happen.
Those approx 5 mill shares as mentioned were just bonus shares in excess of the 15.5% fixed interest rate so to me DPDW got raped a bit on the terms (yet they're still shopping which was one reason i was trying to ge tpeople to look atthis stuff closely regardless of product quality- the finances IMO also need to be in better order to feel safe with an investment here I would think). They also had to pay a nominal fee for points on the loan.
At 15.5% I'd be telling the lender to give me $#@% money from points LOL. Not vice versa. But that is the way it went and part of this company's apparent very aggressive strategy. They are stretching things further than most any company I've looked into before but I have not looked into a ton of companies.
It'll be interesting to see what kind of terms are there when financing gets announced.
Good luck.
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