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Post by u1682002 on Dec 20, 2018 11:34:48 GMT -5
Why MNKD tanked 35% ($1.1/share) when the offer is $1.5/share? Can the buyer of these offered stocks back out of this deal since the stock price goes well below the offered price?
Bought ~1000 shares @ $1.14 this morning to stay with this "loser club"! 
Merry Christmas everyone! I am going to Disneyland. |
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Post by uvula on Dec 20, 2018 11:36:52 GMT -5
I don't think the buyers exist yet.
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Post by u1682002 on Dec 20, 2018 11:43:14 GMT -5
I don't think the buyers exist yet. I do not know the answer but surely hope you are wrong here. I just wish the MNKD nightmare can be behind us for a while! Any expert here can give a straight answer? |
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Post by uvula on Dec 20, 2018 11:54:04 GMT -5
It is an offering, not a private placement.
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Post by awesomo on Dec 20, 2018 11:58:05 GMT -5
The warrants are what make this deal still valuable for the buyers. It is also these same warrants that will hold us shareholders hostage for a long time. These warrants are extremely toxic, but it’s the incentive needed to get this crappy financing deal done.
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Post by u1682002 on Dec 20, 2018 12:11:57 GMT -5
The warrants are what make this deal still valuable for the buyers. It is also these same warrants that will hold us shareholders hostage for a long time. These warrants are extremely toxic, but it’s the incentive needed to get this crappy financing deal done. As I read the announcement details again, I came up with an understanding that MNKD can potentially get ~$80m (40m from stock and ~40m from warrant if investors choose to exercise it right away). Am I wrong? |
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Post by uvula on Dec 20, 2018 12:16:06 GMT -5
I guess there might be some people who are bad at math who would exercise the warrant at $1.60 even thought they could buy shares on the open market for less than that. But there aren't $40 million worth of people who are bad at math.
[edit: per agedhippie's post below, I am bad at math also. I don't understand how the price of warrants fluctuates but the bottom line is that mnkd will not get immediate cash from them.]
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Post by agedhippie on Dec 20, 2018 12:21:01 GMT -5
The warrants are what make this deal still valuable for the buyers. It is also these same warrants that will hold us shareholders hostage for a long time. These warrants are extremely toxic, but it’s the incentive needed to get this crappy financing deal done. As I read the announcement details again, I came up with an understanding that MNKD can potentially get ~$80m (40m from stock and ~40m from warrant if investors choose to exercise it right away). Am I wrong? The value in the warrants is entirely in the time element currently so exercising the warrant now would be a very bad idea. The warrant holders can sell the warrants if they want to get rid of them, I reckon they are worth $0.40 at this moment. |
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Post by awesomo on Dec 20, 2018 12:24:51 GMT -5
I guess there might be some people who are bad at math who would exercise the warrant at $1.60 even thought they could buy shares on the open market for less than that. But there aren't $40 million worth of people who are bad at math. You’re missing the value of time. Owning the warrants that can be exercised in a year grants extremely valuable hedging and arbitrage opportunities. |
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Post by uvula on Dec 20, 2018 12:27:22 GMT -5
I guess there might be some people who are bad at math who would exercise the warrant at $1.60 even thought they could buy shares on the open market for less than that. But there aren't $40 million worth of people who are bad at math. You’re missing the value of time. Owning the warrants that can be exercised in a year grants extremely valuable hedging and arbitrage opportunities. I'm missing lots of things. The point is that mnkd will not get cash now from people exercising these new warrants. |
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Post by awesomo on Dec 20, 2018 12:35:53 GMT -5
You’re missing the value of time. Owning the warrants that can be exercised in a year grants extremely valuable hedging and arbitrage opportunities. I'm missing lots of things. The point is that mnkd will not get cash now from people exercising these new warrants. Well yeah, you’re absolutely right that nobody will be exercising the warrants now and best case scenario, one year from now MNKD gets another $40 million while diluting us even more at a crappy price (only if share price is above $1.60, which we were at yesterday...). |
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Post by u1682002 on Dec 20, 2018 12:55:43 GMT -5
The following is a response from MNKD management that I got today. Not sure I got what I want to hear but I guess this is the best they can do. I do understand they have to take some actions right now to secure the necessary fund for next year giving the market conditions.
Dear Mr. xxx,
To effectively promote Afrezza and to invest in our pipeline, ultimately resulting in collaborations such as United Therapeutics, we need capital resources which we all agree should have come from Afrezza sales or prior deals. As you may be familiar with, over the years, we’ve done equity offerings, some of which came easy when Mr. Mann was still with us and some of which came during what others perceived as desperation. So for our CEO and CFO, there is a thoughtful process to timing.
They are also painfully thoughtful of dilutive financings. They have exhaustively looked at non-dilutive alternatives resulting in terms that we wouldn’t necessarily want to be held hostage to, especially in the ensuing year(s) when we expect success in both Afrezza and our pipeline technology.
Ancillary to the ultimate goal of raising capital, but important for the long-term, are increasing our institutional ownership (our CEO and CFO have been on non-stop targeted non-deal roadshows with institutionals leading up to this offering), and elevating our banking relationships to get effective analyst coverage.
There are a lot of considerations and at the right time, we will provide transparency. Announcements and the disclosure process are strictly regulated by securities laws which legal counsel dictates to the Company.
---------------------------------------
Rose Alinaya
SVP Investor Relations & Treasury
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Post by agedhippie on Dec 20, 2018 12:58:05 GMT -5
I guess there might be some people who are bad at math who would exercise the warrant at $1.60 even thought they could buy shares on the open market for less than that. But there aren't $40 million worth of people who are bad at math. [edit: per agedhippie's post below, I am bad at math also. I don't understand how the price of warrants fluctuates but the bottom line is that mnkd will not get immediate cash from them.] The price we are seeing of $1.50 is for a unit, not a share. The unit is made up of a share and a warrant which can be sold separately. Don't confuse the value of the warrant (what I will pay you to give me your warrant) with the cost of exercising the warrant which is fixed. The value of the warrant fluctuates as the share price does like a Call option would. |
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Post by wgreystone on Dec 20, 2018 13:01:48 GMT -5
The warrants are what make this deal still valuable for the buyers. It is also these same warrants that will hold us shareholders hostage for a long time. These warrants are extremely toxic, but it’s the incentive needed to get this crappy financing deal done. The warrants only valid for one year, so not too bad. |
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Post by agedhippie on Dec 20, 2018 13:05:41 GMT -5
To answer the original question - it doesn't matter. The underwriter has agreed (for a fee) to pay Mannkind the whole amount. Finding and keeping buyers is the underwriter's problem. I would be shocked if the underwriter didn't already have their buyers locked up, and those buyers had not already shorted the stock.
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