Ok, so announcement says this'll boost ESW's pre-tax income to...

Ok, so announcement says this'll boost ESW's pre-tax income to $9 mil for the 2012 financial year.

But ... ESW need to finance this deal. Firstly they'll do a 2 for 7 share consolidation, which means 140000 shares bought for, say, 6c become 40000 shares, ostensibly worth 21c. It reduces the number of shares on issue from 129,444,217 to 36,984,062. So far so good.

To finance it, they intend to raise $17.4 million (remember this is currently a $7mill company) at 20c. That's more than tripling the number of shares on issue. They'll do this firstly by $11.9 mil from sophs, and the rest with an entitlement issue to existing holders.

At the end, if they held at a shareprice of 20c, they'd be a $24.5 million MC company, earning $9 million a year.

It all sounds good, and any buy below 6c now brings you under the 20c price post-consolidation. Only question I have is - will they succeed in raising the money? If I were a soph I'd want to see a crystal clear, rock solid business case before parting with that much cash.