So just to get the ball rolling, let's assume that the JV happens and the JV buys 35% of MI and that MI receives a 25% interest (fixed for 10yrs) in the JV. I would guess the JV is worth $80 at that point which would give MI $20 million in equity. But, how exactly would that work? There are really only 4 ways that it could work; Issue new share, sell shares of controlling shareholders, buy in the public market via stock exchange (inefficient & costly) or buyout most of the existing holders (costly) and possibly go private with an eye towards IPO 2-5 years down the road.
The only plausible way for this to work would be for MI to issue additional shares. Based upon that assumption, they would need to issue about 27 million new shares. Using today's closing price of about $.26/share, that means an investment of about $7 million. But where's the logic or incentive of paying the going price for that kind of cash.
If it was my money, the most I would put up for such a starving company is about 30% of the going price plus warrants that kick in at no more than about $.40/share for at least another 10% of the company. I assume the insiders will want to retain control (ie. 50%) so the individual shareholders would take the dilution hit. I would expect to see a reduction in ownership from about 48% today (amount of the current float) to less than 10-13% on the part of individual shareholders. That would be about a 60% reduction. None of this factors in the value of the equity interest in the JV and it does state that MI would provide the engines to the JV so there might still be some additional value.
Bottomline, if the JV happens and money exchanges hands, we will be off to the races, but individual shareholders will probably be left with very little and will probably take a big hit in the short term.
Then again, it all depends on the details of such a deal to which we have no significant information. Frankly, the easier and less costly route with that type of new investment amount is to just take the company private. It's cheaper, there is less red tape, no shareholder issues, and no SEC to deal with until they IPO in 3 - 5 yrs at $10/share.
My guess is go private at $.30/share. Hmm..that would really sting for most long term investors!!!
gd6845, that is a good analysis. Unfortunately here we have only the Cheerleaders on the one side that will only give you short answers with no substance, like you already have and the nay-sayers that will also not be of much help, whose answers may be with even less substance.
All I can say is we'll have to wait and see. This "deal" is taking too long for my liking. If you have a MOU and cant sort out the details of the JV agreement in a month, then some one is unable to bring something to the party. Either athena can't come up with the cash or Moller can't prove that they are able to do what they told Athena they could do within a specified time period or within a certain budget frame.
But as to how Athena is to aquire 35%, I have no idea. Not one of the 4 ways you described is optimal. I try and look at it from Athena's point of veiw, and to me the issuing of new shares seems the better, but not ideal, option. From MI's point of view this option is also the better one. Buying in the market or buying out existing shareholders is definitely not an option with this type of deal. That is more hostile takeover tactics and it wont work as Moller still holds majority shares. And I'm not seeing Moller parting with his majority shares any time soon. It looks like existing shareholders is going to have to take the knock.