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Post by celo on Jun 19, 2019 9:07:42 GMT -5
To quote an ST poster named Sunnyholiday of things said by MC at his conference "Enough cash till 2nd half 2020. Didn't want to sell stock to Deerfield at these prices."
How will the stock price change between now and mid July? Or will he not need to use shares to pay Deerfield that there will be a cash infusion? Why if so, was that not announced or is Mannkind in the last days of putting the final touches on a contract? Or am I just kidding myself and Mike is just hoping for some reason that the share price will be higher in a month?
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Post by cjm18 on Jun 19, 2019 9:10:57 GMT -5
To quote an ST poster named Sunnyholiday of things said by MC at his conference "Enough cash till 2nd half 2020. Didn't want to sell stock to Deerfield at these prices." How will the stock price change between now and mid July? Or will he not need to use shares to pay Deerfield that there will be a cash infusion? Why if so, was that not announced or is Mannkind in the last days of putting the final touches on a contract? Or am I just kidding myself and Mike is just hoping for some reason that the share price will be higher in a month? Sounds like another particle will be announced. Then shares will be converted to cash for Deerfield.
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Post by awesomo on Jun 19, 2019 9:11:48 GMT -5
Nobody knows, but surely if some material event was going to happen in the next month that would raise the share price, Deerfield would have wanted their shares now since they still seem to hold all the cards in negotiation.
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Post by sportsrancho on Jun 19, 2019 9:13:08 GMT -5
Spencer on ST Possible secondary waiting in the wings. Limited shares available for use means they either use them for DF or secondary. I suspect a secondary in the near term. @vibes121 triop_Corp problem with ATM is that it is cash in small chunks at various market prices. A new secondary would be cash in 1 chunk at an established price. Mnkd has limited shares to play with as the shelf is pretty much dry with shares committed to other debt, warrants, etc.. lavolpe assume cash will be used, but it may take shares to raise that cash. There is another $3.95 million due in mid July which has not yet been addressed.
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Post by peppy on Jun 19, 2019 9:15:38 GMT -5
Nobody knows, but surely if some material event was going to happen in the next month that would raise the share price, Deerfield would have wanted their shares now since they still seem to hold all the cards in negotiation.DF can buy them on NASDAQ stock exchange.
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Post by mytakeonit on Jun 19, 2019 12:18:09 GMT -5
Ahhh ... nasty girl is back !!! Ha! Gotta love it !!!
BTW, Deerfield doesn't hate MNKD ... they are there to help them people. And, where does this leave VDEX? Probably in Wyoming.
But, that's mytakeonit
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Post by goyocafe on Jun 19, 2019 12:20:26 GMT -5
Nobody knows, but surely if some material event was going to happen in the next month that would raise the share price, Deerfield would have wanted their shares now since they still seem to hold all the cards in negotiation.DF can buy them on NASDAQ stock exchange. Maybe they can’t because they know what’s coming (insider stuff and all that) and are just playing nice at the end of the game.
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Post by awesomo on Jun 19, 2019 12:22:34 GMT -5
BTW, Deerfield doesn't hate MNKD ... they are there to help them people. And, where does this leave VDEX? Probably in Wyoming. Deerfield is here to make money, period. This isn't some charity.
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Post by figglebird on Jun 19, 2019 12:33:05 GMT -5
If DF has the right as I thought(unless all outstanding is settled w cash) to convert any payment to shares, which they always do.
What is significant is MC reiterating funding etc.
We'll see
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Post by Deleted on Jun 19, 2019 12:40:14 GMT -5
If the 20 million minimum cash balance does not go away with the final payment then the company is still looking for funds from the atm or other sources. In escrow would count towards the balance. That Cash on Hand Covenant is for Quarters End and August 31st is not the EOQ.
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Post by prcgorman2 on Jun 19, 2019 13:00:45 GMT -5
I will speculate a secondary offering or paying with stock in the timeframe being discussed is roughly equivalent (assuming both secondary offering or paying with stock are both going to be discounted) so I don't see a material upside to either choice and do not understand why SO speculated at that other than his usual casting of FUD.
In the end, maybe it's just "A dollar today is worth more than a dollar tomorrow". Some companies as a matter of practice preserve cash as long as possible.
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Post by sportsrancho on Jun 19, 2019 13:28:53 GMT -5
Matt,
If you were advising Mannkind on their next capital raise post Deerfield would you do equity or debt and if the later, what kind of terms would lenders realistically have at this point in time? Did you find the terms of the Deerfield debt particularly onerous or typical given Mannkind's situation at the time the loans were made? Is there some type of debt structure that would not hinder SP as much as what was negotiated with Deerfield?
Lastly, the proposal VDex threw out, if they could demonstrate they had lenders ready to invest, real estate ready to be leased and could demonstrate a patient acquisition cost that allowed them to be profitable, would you grant them a trial of say 5 states or so and a given amount of time to produce a predetermined amount of revenue with some type of failure to produce clause that could terminate the deal without penalty for Mannkind?
Matt_PK... The terms of the Deerfield debt package were not particularly onerous given the stage of the company and what the debt market typically offers. It is just like having a home mortgage, the bank does what it needs to do to protect its loan and everything is smooth sailing until something bad happens, like if the borrower loses their job. Here too, if MNKD had executed on the operational plans it had in place then the Deerfield covenants would have been a rounding error in the grand scheme of things; they only became a problem because MNKD didn't execute as planned.
MNKD is still way overleveraged even without Deerfield. The next round of financing is either going to be equity or "hard money" debt. Hard money usually winds up being so toxic that it kills the company. Debt holders are lenders, not equity holders, but when the balance sheet gets overleveraged they essentially become a senior class of equity that can call the shots and that is not good for common equity. Spencer's perpetual warnings to watch the cash balance are prudent reminders of this dynamic and he is not wrong to warn people. It doesn't matter if you call it debt or if you call it equity; it only matters what rights the security holders have. The more risk an investor takes on the more the security will behave like a combination of debt and preferred stock.
As for Vdex, the proposal is so vague that I am not sure I can fairly comment. Certainly it is common for a distributor to agree to minimum sales or to lose the franchise so that should not be an issue. On its face this looks like a fairly simple deal, but given the resistance there is likely something else going on that is non-public. The way that Vdex has approached this matter is not the normal way that deals begin, and that uncertainty raises a lot of questions I cannot begin to answer.
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Post by matt on Jun 19, 2019 14:18:52 GMT -5
The one caveat to the quote you just posted is that there may be some non-public information on a source of material funding, such as another UTHR-type transaction. There is no way to predict such events without knowing exactly what is happening with management and the company. Today's announcement that the company has delayed payment to DF, but still has to deposit the cash into escrow, has me scratching my head as there is little difference between paying them on time and depositing the money so that they can be paid in a few weeks. Once the funds go into escrow they are encumbered such that they are essentially no longer Mannkind's to use as they see fit, and the company will be paying DF more in interest because of the delay than they will be earning in interest on the escrow account.
When you see a transaction that, on its face, seems to make little sense then you can generally assume that there is something else happening that shareholders don't know about . . . yet.
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Post by sportsrancho on Jun 19, 2019 14:25:02 GMT -5
The one caveat to the quote you just posted is that there may be some non-public information on a source of material funding, such as another UTHR-type transaction. There is no way to predict such events without knowing exactly what is happening with management and the company. Today's announcement that the company has delayed payment to DF, but still has to deposit the cash into escrow, has me scratching my head as there is little difference between paying them on time and depositing the money so that they can be paid in a few weeks. Once the funds go into escrow they are encumbered such that they are essentially no longer Mannkind's to use as they see fit, and the company will be paying DF more in interest because of the delay than they will be earning in interest on the escrow account. When you see a transaction that, on its face, seems to make little sense then you can generally assume that there is something else happening that shareholders don't know about . . . yet. Agree, add that to the growing list of questions we can’t begin to answer.
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Post by tingtongtung on Jun 19, 2019 14:33:08 GMT -5
Matt, If you were advising Mannkind on their next capital raise post Deerfield would you do equity or debt and if the later, what kind of terms would lenders realistically have at this point in time? Did you find the terms of the Deerfield debt particularly onerous or typical given Mannkind's situation at the time the loans were made? Is there some type of debt structure that would not hinder SP as much as what was negotiated with Deerfield? Lastly, the proposal VDex threw out, if they could demonstrate they had lenders ready to invest, real estate ready to be leased and could demonstrate a patient acquisition cost that allowed them to be profitable, would you grant them a trial of say 5 states or so and a given amount of time to produce a predetermined amount of revenue with some type of failure to produce clause that could terminate the deal without penalty for Mannkind? Matt_PK... The terms of the Deerfield debt package were not particularly onerous given the stage of the company and what the debt market typically offers. It is just like having a home mortgage, the bank does what it needs to do to protect its loan and everything is smooth sailing until something bad happens, like if the borrower loses their job. Here too, if MNKD had executed on the operational plans it had in place then the Deerfield covenants would have been a rounding error in the grand scheme of things; they only became a problem because MNKD didn't execute as planned. MNKD is still way overleveraged even without Deerfield. The next round of financing is either going to be equity or "hard money" debt. Hard money usually winds up being so toxic that it kills the company. Debt holders are lenders, not equity holders, but when the balance sheet gets overleveraged they essentially become a senior class of equity that can call the shots and that is not good for common equity. Spencer's perpetual warnings to watch the cash balance are prudent reminders of this dynamic and he is not wrong to warn people. It doesn't matter if you call it debt or if you call it equity; it only matters what rights the security holders have. The more risk an investor takes on the more the security will behave like a combination of debt and preferred stock. As for Vdex, the proposal is so vague that I am not sure I can fairly comment. Certainly it is common for a distributor to agree to minimum sales or to lose the franchise so that should not be an issue. On its face this looks like a fairly simple deal, but given the resistance there is likely something else going on that is non-public. The way that Vdex has approached this matter is not the normal way that deals begin, and that uncertainty raises a lot of questions I cannot begin to answer. Who is Matt, Matt_PK? Same as matt below your msg?
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