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Post by agedhippie on Jan 2, 2019 7:47:24 GMT -5
There is nothing clever there. Anyone can reduce debt (improve the balance sheet) if they are prepared to dilute the stock which is what was done. The cash has to come from somewhere and since there is no profit it comes from the shareholders in the form of dilution which is why you cannot exclude the PPS. For years, critics of Mannkind claimed debt was too high, there was difficulty closing financial deals and bankruptcy was inevitable. Mike comes in, cleans up the balance sheet, reduces debt, improves sales and pipeline and now suddenly there's nothing clever there?? Nothing clever here At the risk of sounding like Gordon Gecko, debt is not necessarily bad. It is bad when you are paying excessive interest rates or you cannot service the debt. In fairness a lot of the cleared debt was high interest, but I would have expected to see it rolled over into lower cost debt. All of that said if you cannot get debt you can service (what has been happening with Deerfield - having to pay in shares) your options are more limited. If you are not profitable then the operating expenses have to come from somewhere, and right now that is from selling discounted stock (effectively taking from the shareholders). Your options are borrow from someone like Deerfield and pay in stock, or sell stock - both of those at a discount. The advantage to Deerfield is that the dilution is spread out so if the stock is going to improve that will take fewer shares. The advantage to selling to the vultures is that it is a single hit, but if the share price improves you will have overpaid.
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Post by lennymnkd on Jan 2, 2019 8:40:21 GMT -5
Aged, what is your take on the fact the debt is being cleared to have at least part of the pattern released from Deerfield to United to further the business that has been put together.Deerfield seem to be holding the pattern hostage as collateral.
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Post by agedhippie on Jan 2, 2019 9:46:19 GMT -5
Aged, what is your take on the fact the debt is being cleared to have at least part of the pattern released from Deerfield to United to further the business that has been put together.Deerfield seem to be holding the pattern hostage as collateral. Deerfield has both the debt and the milestones secured against the patents so paying the debt would not alter the picture with the patents. The Deerfield milestone rights would also need to be bought out. Deerfield might be open to this since they would get some of their money now rather than an indeterminate amount, but probably more, much later. I think I commented on this elsewhere, but the $40M could conceivably clear the debt and the milestone rights. Really Deerfield's hold on the patents only matters if Mannkind wants to sell them. That could be done with Deerfield's permission even without settling up.
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