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Post by compound26 on Apr 21, 2017 9:31:58 GMT -5
Here is my take of this Deerfield debt restructuring. My thinking is that the whole purpose for this restructuring is for Deerfield to take a 5% stake in Mannkind right now.
a. The main purpose is not to extend Mannkind’s cash runway. Mannkind is to repay $4 million (out of the total of $5 million) of the notes that is due in May. If the main purpose is to extend the cash runway, the whole $5 million of May notes should be swapped for equity. But it is not the case, only $1 million of the May notes is swapped for equity.
b. Why only $1 million of the May notes is swapped for equity? Deerfield control over $100 million of the notes. By swapping only $1 million of the May notes for equity, plus $5 million of the July notes for equity, Deerfield is basically swapping about 1/16 of the Tranche B notes and the other notes that Deerfield controls. So this probably is mainly due to Deerfield wants to allocate the shares to different tranches of note holders on a more pro rata basis.
c. Why Deerfield chooses to swap $6 million of the notes and leave another $10 million of the July notes un-swapped? I think this is because $6 million of the notes translates to about 5 million shares at current share price and gives Deerfield 5% stake.
d. Why Deerfield chooses to take only 5% stake (not a bigger stake)? One of the reasons could be that Mannkind and Mann Trust may only want Deerfield to take 5% at this time. The other reason could be that Deerfield just wants to take a 5% right now.
e. What does this suggest? It at least suggests that Deerfield at this stage wants to assert some control (in addition to its rights as the main debt holder) that a major shareholder has and wants to send a public message out that it now owns a major stake in Mannkind (as it has to file for such ownership).
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Post by cjm18 on Apr 23, 2017 8:05:09 GMT -5
Here is my take of this Deerfield debt restructuring. My thinking is that the whole purpose for this restructuring is for Deerfield to take a 5% stake in Mannkind right now. a. The main purpose is not to extend Mannkind’s cash runway. Mannkind is to repay $4 million (out of the total of $5 million) of the notes that is due in May. If the main purpose is to extend the cash runway, the whole $5 million of May notes should be swapped for equity. But it is not the case, only $1 million of the May notes is swapped for equity. b. Why only $1 million of the May notes is swapped for equity? Deerfield control over $100 million of the notes. By swapping only $1 million of the May notes for equity, plus $5 million of the July notes for equity, Deerfield is basically swapping about 1/16 of the Tranche B notes and the other notes that Deerfield controls. So this probably is mainly due to Deerfield wants to allocate the shares to different tranches of note holders on a more pro rata basis. c. Why Deerfield chooses to swap $6 million of the notes and leave another $10 million of the July notes un-swapped? I think this is because $6 million of the notes translates to about 5 million shares at current share price and gives Deerfield 5% stake. d. Why Deerfield chooses to take only 5% stake (not a bigger stake)? One of the reasons could be that Mannkind and Mann Trust may only want Deerfield to take 5% at this time. The other reason could be that Deerfield just wants to take a 5% right now. e. What does this suggest? It at least suggests that Deerfield at this stage wants to assert some control (in addition to its rights as the main debt holder) that a major shareholder has and wants to send a public message out that it now owns a major stake in Mannkind (as it has to file for such ownership). Good post. Speaking to b...So why would 🦌field want to allocate the shares to different tranches of note holders on a more pro rata basis. I can't think of a reason why mannkind would want that. Which means Deerfield has leverage.
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Post by boca1girl on Apr 23, 2017 8:25:35 GMT -5
The real question is IF Deerfield is still a 5% holder as of 04/23/17. Lots of volume the last two days.
Many have suggested that they already cashed out those shares at a hefty profit via a short hedge.
Hopefully Deerfield's influence on the company will become more apparent by the annual meeting. But maybe we will still be left guessing... as always.
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Post by compound26 on Apr 24, 2017 17:40:21 GMT -5
I understands that Deerfield still holds about $90 million notes after the recent debt restructuring. Also, I do not think that Deerfield sold short immediately before they got the 5 million shares. So assuming they still holds the 5 million shares, Deerfield now holds 5% equity stake and 90 million notes.
If the above assumption is correct, I think Deerfield’s interest is quite aligned with Mannkind at this moment. (If Mannkind is forced to BK, there is no guarantee that Deerfield will be made whole. On the other hand, if Mannkind survives and succeeds, Deerfield will benefit handsomely. )
IMHO, Mannkind’s PPS dropped recently probably for the following reasons: (a) limited and diminishing cash reserve; (b) basically flat scripts; (c) unresolved July debt payment; (d) panicked longs selling; and (e) continued short selling.
Since the May notes payment has already been addressed and there is no immediate payment to be made by Mannkind in the next few weeks, I think Deefield is now in a watching mode. If the scripts show a continued upward trend in the next 4-6 weeks, say, if the scripts go over 300s and then 400 in the next few weeks, it is not unlikely that Deerfield may choose to extend the July note payment date (right now, $10 million needs to be paid) and provide an additional financing of $25 to $30 million (which will represent about 25% additional investment for Deerfield). I understand that in the fourth quarter, Mannkind’s cash burn is around $8 million, if I calculated correctly. If Mannkind can further reduce its cash burn to around $6-7 million a month, $25 to $30 million, plus whatever revenue it can generate, will enable Mannkind to make through the rest of 2017.
With Damon Dash’s diabetes network, Reversed show and anticipated label update to arrive in the third quarter, if Mannkind can maintain continued scripts growth through-out 2017, reaching scripts to around 1,000 by the end of 2017, refinancing and/or partnership will be more likely by then.
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Post by mnkdfann on Apr 24, 2017 17:53:07 GMT -5
I understands that Deerfield still holds about $90 million notes after the recent debt restructuring. Also, I do not think that Deerfield sold short immediately before they got the 5 million shares. So assuming they still holds the 5 million shares, Deerfield now holds 5% equity stake and 90 million notes. I believe several (including, IIRC, both Derek and Matt) have explained why it was likely Deerfield shorted months BEFORE the last restructuring. And that it used the shares recently acquired to cover (some or all of) that short. Arguably, more of a hedge than a short. Quite possibly Deerfield is doing the same thing now, or will do in the next few weeks, in anticipation of the next set of shares it is likely to receive in July.
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Post by dreamboatcruise on Apr 24, 2017 17:59:45 GMT -5
I understands that Deerfield still holds about $90 million notes after the recent debt restructuring. Also, I do not think that Deerfield sold short immediately before they got the 5 million shares. So assuming they still holds the 5 million shares, Deerfield now holds 5% equity stake and 90 million notes. If the above assumption is correct, I think Deerfield’s interest is quite aligned with Mannkind at this moment. (If Mannkind is forced to BK, there is no guarantee that Deerfield will be made whole. On the other hand, if Mannkind survives and succeeds, Deerfield will benefit handsomely. ) IMHO, Mannkind’s PPS dropped recently probably for the following reasons: (a) limited and diminishing cash reserve; (b) basically flat scripts; (c) unresolved July debt payment; (d) panicked longs selling; and (e) continued short selling. Since the May notes payment has already been addressed and there is no immediate payment to be made by Mannkind in the next few weeks, I think Deefield is now in a watching mode. If the scripts show a continued upward trend in the next 4-6 weeks, say, if the scripts go over 300s and then 400 in the next few weeks, it is not unlikely that Deerfield may choose to extend the July note payment date (right now, $10 million needs to be paid) and provide an additional financing of $25 to $30 million (which will represent about 25% additional investment for Deerfield). I understand that in the fourth quarter, Mannkind’s cash burn is around $8 million, if I calculated correctly. If Mannkind can further reduce its cash burn to around $6-7 million a month, $25 to $30 million, plus whatever revenue it can generate, will enable Mannkind to make through the rest of 2017. With Damon Dash’s diabetes network, Reversed show and anticipated label update to arrive in the third quarter, if Mannkind can maintain continued scripts growth through-out 2017, reaching scripts to around 1,000 by the end of 2017, refinancing and/or partnership will be more likely by then. Deerfield is not going to be kind to current shareholders if that don't have to be. There would not to be something else holding up the price our they'll try to get as large of a chunk of MNKD as they can before investing fresh capital, if indeed they had an interest in doing that. Taking MNKD private through bankruptcy is something that could be lucrative for Deerfield... and not me... so I see a potential mismatch of interests rather than guaranteed alignment.
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Post by compound26 on Apr 24, 2017 18:09:23 GMT -5
No guaranteed alignment for sure. However, it is not that easy or cheap for Deerfield to take private Manndind either given that Mann trust/foundation owns significant portion of the equity. And if Deerfield forces Mannkind to bankruptcy, there is no guarantee that it will be made whole either.
We are about 10 weeks in this current relaunch. So it is still in the early stages. Deerfield is probably still waiting to make a decision on whether the launch will get traction if given some additional time (say the rest of the year).
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Post by buyitonsale on Apr 24, 2017 18:11:07 GMT -5
files.shareholder.com/downloads/AMDA-22AIJ9/4041148637x0xS1193125%2D17%2D127928/899460/filing.pdfRECITALS : A. The Borrower and the Purchasers have entered into that certain Facility Agreement, dated as of July 1, 2013, as amended by the First Amendment to Facility Agreement and Registration Rights Agreement dated as of February 28, 2014, and the Second Amendment to Facility Agreement dated as of August 11, 2014 (as the same may be further amended, modified, restated or otherwise supplemented from time to time, the “ Facility Agreement ”). B. The Facility Agreement provides for the issuance of Notes in 4 Tranches of $40 million per Tranche. Prior to the date hereof, the Purchasers have purchased the Tranche 1 Notes, the Tranche 2 Notes, the Tranche 3 Notes and the Tranche 4 Notes in the aggregate principal amount of $40 million per Tranche. C. Prior to the date hereof, the Purchasers have converted $20 million in principal amount of the Tranche 1 Notes and all of the Tranche 2 Notes and the Tranche 3 Notes into Common Stock, the Tranche 1 Notes have been amended and restated (and are hereinafter referred to as the Amended and Restated Notes), and the Borrower has repaid $5 million in principal amount of the Amended and Restated Notes, leaving $15 million in principal amount of the Amended and Restated Notes and $40 million in principal amount of the Tranche 4 Notes outstanding. D. The Facility Agreement also provides for the issuance of Tranche B Notes. An aggregate of $20 million in principal amount of Tranche B Notes has been issued to the Purchasers and all $20 million in principal amount of the Tranche B Notes are currently outstanding. C. states that 55 million is outstanding and D. states additional 20 million is outstanding. So, the total remaining debt to Deerfield is 75 million?
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Post by dreamboatcruise on Apr 24, 2017 18:16:52 GMT -5
No guaranteed alignment for sure. However, it is not that easy or cheap for Deerfield to take private Manndind either given that Mann trust/foundation owns significant portion of the equity. And if Deerfield forces Mannkind to bankruptcy, there is no guarantee that it will be made whole either. Actually, if Deerfield has money they would be willing to put in, I'd almost guarantee they could come out of bankruptcy with control, and if Afrezza can be a success they would then be in position for huge profit, not just becoming whole. I'd say the most likely reason for the change of control agreement is the possibility of a less than totally friendly situation where Deerfield ends up controlling MNKD, or owning it outright.
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Post by derek2 on Apr 24, 2017 18:23:44 GMT -5
files.shareholder.com/downloads/AMDA-22AIJ9/4041148637x0xS1193125%2D17%2D127928/899460/filing.pdfRECITALS : A. The Borrower and the Purchasers have entered into that certain Facility Agreement, dated as of July 1, 2013, as amended by the First Amendment to Facility Agreement and Registration Rights Agreement dated as of February 28, 2014, and the Second Amendment to Facility Agreement dated as of August 11, 2014 (as the same may be further amended, modified, restated or otherwise supplemented from time to time, the “ Facility Agreement ”). B. The Facility Agreement provides for the issuance of Notes in 4 Tranches of $40 million per Tranche. Prior to the date hereof, the Purchasers have purchased the Tranche 1 Notes, the Tranche 2 Notes, the Tranche 3 Notes and the Tranche 4 Notes in the aggregate principal amount of $40 million per Tranche. C. Prior to the date hereof, the Purchasers have converted $20 million in principal amount of the Tranche 1 Notes and all of the Tranche 2 Notes and the Tranche 3 Notes into Common Stock, the Tranche 1 Notes have been amended and restated (and are hereinafter referred to as the Amended and Restated Notes), and the Borrower has repaid $5 million in principal amount of the Amended and Restated Notes, leaving $15 million in principal amount of the Amended and Restated Notes and $40 million in principal amount of the Tranche 4 Notes outstanding. D. The Facility Agreement also provides for the issuance of Tranche B Notes. An aggregate of $20 million in principal amount of Tranche B Notes has been issued to the Purchasers and all $20 million in principal amount of the Tranche B Notes are currently outstanding. C. states that 55 million is outstanding and D. states additional 20 million is outstanding. So, the total remaining debt to Deerfield is 75 million? Yes, you have it right, as well as the milestone payments to Deerfield if Afrezza ever takes off.
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Post by compound26 on Apr 24, 2017 18:30:56 GMT -5
If Deerfield forces Mannkind into BK, they will face a few risks.
1. Afrezza's relaunch will basically be suspended again and lose whatever momentum they have at the time of BK. This will reduce the value of the Afrezza and TS assets.
2. Once it is in BK process, there is no guarantee it will be quick and smooth process for Deerfield to get out as the owner of the afrezza assets. What if it takes a few years? The afrezza assets will further depreciate as patents approch expiration and other competing technologies get developed.
3. Deerfield is not a BP or drug company themselves, so it will take time and probably some risk for them to successfully money-tize the Afrezza assets. Will it be foreced to run itself or try to find a buyer? There will be some risks and unforceability in either option.
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Post by dreamboatcruise on Apr 24, 2017 19:02:09 GMT -5
If Deerfield forces Mannkind into BK, they will face a few risks. 1. Afrezza's relaunch will basically be suspended again and lose whatever momentum they have at the time of BK. This will reduce the value of the Afrezza and TS assets. 2. Once it is in BK process, there is no guarantee it will be quick and smooth process for Deerfield to get out as the owner of the afrezza assets. What if it takes a few years? The afrezza assets will further depreciate as patents approch expiration and other competing technologies get developed. 3. Deerfield is not a BP or drug company themselves, so it will take time and probably some risk for them to successfully money-tize the Afrezza assets. Will it be foreced to run itself or try to find a buyer? There will be some risks and unforceability in either option. 1) Not necessarily true if they have money ready to loan. 2) Unless there is some other creditor, with money they are willing to loan, Deerfield is pretty much in control. They wouldn't have to stiff other creditors. If they were to offer to convert other creditors to equity at the same rate, there would be little to stand in the way of it quickly going through bankruptcy. They could even sweeten the pot by throwing in some cash for the other creditors. Us common shareholders basically could do little to stop it. 3) Deerfield might keep current management or they might be able to bring in some heavy hitter... someone that currently MNKD cannot afford or attract with risk of bankruptcy looming. I've seen too many bankruptcies to believe that creditors always want to avoid them. I have no way of knowing if that is in their plans, they may not even believe in Afrezza at this point, but I would equally say there is no way of knowing it is not in their plans.
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Post by kc on Apr 24, 2017 19:24:35 GMT -5
Here is my take of this Deerfield debt restructuring. My thinking is that the whole purpose for this restructuring is for Deerfield to take a 5% stake in Mannkind right now. a. The main purpose is not to extend Mannkind’s cash runway. Mannkind is to repay $4 million (out of the total of $5 million) of the notes that is due in May. If the main purpose is to extend the cash runway, the whole $5 million of May notes should be swapped for equity. But it is not the case, only $1 million of the May notes is swapped for equity. b. Why only $1 million of the May notes is swapped for equity? Deerfield control over $100 million of the notes. By swapping only $1 million of the May notes for equity, plus $5 million of the July notes for equity, Deerfield is basically swapping about 1/16 of the Tranche B notes and the other notes that Deerfield controls. So this probably is mainly due to Deerfield wants to allocate the shares to different tranches of note holders on a more pro rata basis. c. Why Deerfield chooses to swap $6 million of the notes and leave another $10 million of the July notes un-swapped? I think this is because $6 million of the notes translates to about 5 million shares at current share price and gives Deerfield 5% stake. d. Why Deerfield chooses to take only 5% stake (not a bigger stake)? One of the reasons could be that Mannkind and Mann Trust may only want Deerfield to take 5% at this time. The other reason could be that Deerfield just wants to take a 5% right now. e. What does this suggest? It at least suggests that Deerfield at this stage wants to assert some control (in addition to its rights as the main debt holder) that a major shareholder has and wants to send a public message out that it now owns a major stake in Mannkind (as it has to file for such ownership). Below is what I stated last week when they converted the debt to shares. Deerfield knows the value of the company and why would he sell it out short if he thinks he can get a big payday if he can get MannKind turned around. This guy might be our activist investor. He has a lot to lose and he wants to make some big bucks. Watch more of the debt converted to shares. Once he gets 10% he might ask for a board position. You never know if that is not already planed even knowing that the Shareholders Meeting documents showed re-election of the current incumbent directors. He appears to be friendly today but he might get more aggressive and push for the sale of the company. If Flynn believes that Afrezza will be a winner he will stick it out for the HOMERUN. He will not cut and run. But who knows other than Flynn. My comments from last week: Maybe he will eventually ask for a board seat and become an activist investor. You can bet that with a 5.1% interest he will want to see a return and perhaps push or help the company to make a sale. I view this all as being positive. Have to do the research on other deals Flynn has been involved in. Deerfield Management, managed by James E. Flynn since 2000, is a healthcare focused investment company that specializes in funding R&D, managing hostile takeovers, corporate transitions and financial advisory services. Deerfield Management oversees $3.5 billion in assets. Read more at www.insidermonkey.com/hedge-fund/deerfield+management/408/#DxSlo4jADmByZ6bp.99Remember Flynn wants to win with MannKind... www.fiercebiotech.com/special-report/deerfield-managementwww.bloomberg.com/research/stocks/private/person.asp?personId=8002481&privcapId=3751585Background Mr. James Edward Flynn, also known as Jim, has been a Partner of Deerfield Management Company, L.P. since February 2000 and serves as its President. Mr. Flynn served as a Managing Director of the equity research department at ING Baring Furman Selz from 1996 to February 2000, a Vice President of Corporate Developmennt at Alpharma Inc., a pharmaceutical company, from 1993 to 1995, and a Senior Vice President of Equity Research at Kidder, Peabody & Co., an investment banking firm from 1988 to 1993. Mr. Flynn was an Equity Analyst of Kidder Peabody Group Inc., Research Division and ING Groep N.V., Research Division. He serves as a Trustee of Mount Sinai Beth Israel. He serves as a Trustee of Continuum Health Partners, Inc., Beth Israel Medical Center and St Luke's-Roosevelt Hospital Center. He serves as a Director of eCaring LLC. Mr. Flynn attended from University of Michigan in Economics, Cellular Biology and Molecular Biology Read more: mnkd.proboards.com/thread/7610/deal-deerfield-convertible-notes-2019?page=11#ixzz4fDOFi7sg
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Post by dreamboatcruise on Apr 24, 2017 19:49:24 GMT -5
Here is my take of this Deerfield debt restructuring. My thinking is that the whole purpose for this restructuring is for Deerfield to take a 5% stake in Mannkind right now. a. The main purpose is not to extend Mannkind’s cash runway. Mannkind is to repay $4 million (out of the total of $5 million) of the notes that is due in May. If the main purpose is to extend the cash runway, the whole $5 million of May notes should be swapped for equity. But it is not the case, only $1 million of the May notes is swapped for equity. b. Why only $1 million of the May notes is swapped for equity? Deerfield control over $100 million of the notes. By swapping only $1 million of the May notes for equity, plus $5 million of the July notes for equity, Deerfield is basically swapping about 1/16 of the Tranche B notes and the other notes that Deerfield controls. So this probably is mainly due to Deerfield wants to allocate the shares to different tranches of note holders on a more pro rata basis. c. Why Deerfield chooses to swap $6 million of the notes and leave another $10 million of the July notes un-swapped? I think this is because $6 million of the notes translates to about 5 million shares at current share price and gives Deerfield 5% stake. d. Why Deerfield chooses to take only 5% stake (not a bigger stake)? One of the reasons could be that Mannkind and Mann Trust may only want Deerfield to take 5% at this time. The other reason could be that Deerfield just wants to take a 5% right now. e. What does this suggest? It at least suggests that Deerfield at this stage wants to assert some control (in addition to its rights as the main debt holder) that a major shareholder has and wants to send a public message out that it now owns a major stake in Mannkind (as it has to file for such ownership). Below is what I stated last week when they converted the debt to shares. Deerfield knows the value of the company and why would he sell it out short if he thinks he can get a big payday if he can get MannKind turned around. This guy might be our activist investor. He has a lot to lose and he wants to make some big bucks. Watch more of the debt converted to shares. Once he gets 10% he might ask for a board position. You never know if that is not already planed even knowing that the Shareholders Meeting documents showed re-election of the current incumbent directors. He appears to be friendly today but he might get more aggressive and push for the sale of the company. If Flynn believes that Afrezza will be a winner he will stick it out for the HOMERUN. He will not cut and run. But who knows other than Flynn. My comments from last week: Maybe he will eventually ask for a board seat and become an activist investor. You can bet that with a 5.1% interest he will want to see a return and perhaps push or help the company to make a sale. I view this all as being positive. Have to do the research on other deals Flynn has been involved in. Deerfield Management, managed by James E. Flynn since 2000, is a healthcare focused investment company that specializes in funding R&D, managing hostile takeovers, corporate transitions and financial advisory services. Deerfield Management oversees $3.5 billion in assets. Read more at www.insidermonkey.com/hedge-fund/deerfield+management/408/#DxSlo4jADmByZ6bp.99Remember Flynn wants to win with MannKind... www.fiercebiotech.com/special-report/deerfield-managementwww.bloomberg.com/research/stocks/private/person.asp?personId=8002481&privcapId=3751585Background Mr. James Edward Flynn, also known as Jim, has been a Partner of Deerfield Management Company, L.P. since February 2000 and serves as its President. Mr. Flynn served as a Managing Director of the equity research department at ING Baring Furman Selz from 1996 to February 2000, a Vice President of Corporate Developmennt at Alpharma Inc., a pharmaceutical company, from 1993 to 1995, and a Senior Vice President of Equity Research at Kidder, Peabody & Co., an investment banking firm from 1988 to 1993. Mr. Flynn was an Equity Analyst of Kidder Peabody Group Inc., Research Division and ING Groep N.V., Research Division. He serves as a Trustee of Mount Sinai Beth Israel. He serves as a Trustee of Continuum Health Partners, Inc., Beth Israel Medical Center and St Luke's-Roosevelt Hospital Center. He serves as a Director of eCaring LLC. Mr. Flynn attended from University of Michigan in Economics, Cellular Biology and Molecular Biology Read more: mnkd.proboards.com/thread/7610/deal-deerfield-convertible-notes-2019?page=11#ixzz4fDOFi7sgSeems like no way of knowing whether he intends to be a good witch or a bad witch... or perhaps an indifferent one that has already unloaded the shares that were converted at a discount.
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Post by kc on Apr 24, 2017 19:56:34 GMT -5
I am betting a good witch who wants a very big payday and is tired of waiting for the ship to come in. If he knows Pharma which he appears to know the industry he will be an activist. Better to make hundreds of Millions rather than pennies on the dollar in a bankruptcy. Shares are unsecured. He went from a secured position to an unsecured in order to help the company survive. Of course he still has secured debt to get paid back. Think about what he might make if they have enough cash to turn this around.
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