Capital

Equity financing is a delicate balance between being well capitalized enough to advance the project on a schedule, and deploying capital to keep the share price higher than the last financing.

Shareholders want to limit the amount of shares extended to control dilution, and the investors want to buy a price below market and have the preference to sell as they want. A poorly negotiated deal can ruin reputations and the consequences of not refinancing are far worse.

What often happens is new investors will gain a preferential amount of shares at a lower price and influences how the company decides to restructure. If dilution becomes unattractive to new shareholders, the shares can be rolled back to a fraction of current denomination. This disadvantages earlier shareholders but proves a better option than sinking the company.