Welwind Energy International Corp (OTC:WWEI), a standard penny stock, showed some intriguing price action on the chart. 56% gain was recorded as the company was promised a cash injection. The price rally could be short lived though.$15.5 million from an undisclosed investor was negotiated by Mr. Simon Wong, Director of Welwind. Mind that the transaction of these funds is yet to take place, which is why the according reaction of the stock market drove the initial gains down by the end of the day. Funding was necessary for the cash deprived Welwind, but the terms are unknown, and the closing of the deal is still questionable altogether.[BANNER]
The financing is meant to be used for Welwind’s Inner Mongolia project. 80% ownership of a 300MW wind farm project is planned to be acquired from Inner Mongolia Test Power Ltd.
Obviously, the penny stock company wants investors’ attention. Their best shot to move the business any further is by issuing more stock or convertible debt. The company was not able to make a single penny in revenues throughout more than 4 years of operations, but they managed to get $1.7 million in debt with only $0.5 million worth of assets to counter it.
Considering the situation, the new funds will be coming in at very adverse terms and probably will be secured at the cost of possible dilution to shareholders. According to the SEC records, dilution was 22% over the last year, so it’s clear Welwind’s management will not be holding back.
