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Post by rfogel on Nov 13, 2019 20:39:25 GMT -5
I don't recall ever seeing a debt covenant being tied to a net revenues sliding scale. I would think they would be more inclined to tie it to net profit. Net revenue isolates how well the business operations itself is doing/growing; things like expenses, which is included in net profit, can be variable. Note I was taking the lender's point of view. If I were a lender, I would worry that the company might go on a spending spree -- e.g. double the number of drug reps -- to boost revenues in order to get the rest of the loans, but which might weaken the company financially and put the loans at increased risk. |
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Post by letitride on Nov 13, 2019 20:58:37 GMT -5
Im sure they can stop the buyout with a reverse split and an additional 100,000,000 million authorized shares to fend off the hostile takeover. That and another round of financing to boost the balance sheet before the new year. That should about do it for cash infusions for awhile. Imagine that I will be able to sleep at night knowing Mannkind wont be lost to some toxic lender, be taken over and sold off to BP for pennies and there will no longer be a need for HFM. All in my opinion. This helps you sleep at night?! I think you’re ignoring some relevant facts in that scenario. And if anything, it would only highlight the need for HFM... SMH! |
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Post by awesomo on Nov 13, 2019 21:17:32 GMT -5
Net revenue isolates how well the business operations itself is doing/growing; things like expenses, which is included in net profit, can be variable. Note I was taking the lender's point of view. If I were a lender, I would worry that the company might go on a spending spree -- e.g. double the number of drug reps -- to boost revenues in order to get the rest of the loans, but which might weaken the company financially and put the loans at increased risk. The risk is mitigated by the lender having claim on MannKind’s assets if the loans default. |
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Post by porkini on Nov 14, 2019 0:27:25 GMT -5
This helps you sleep at night?! I think you’re ignoring some relevant facts in that scenario. And if anything, it would only highlight the need for HFM... ! Scratching My Head - Saturday Morning Hangover?  |
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Post by pat on Nov 14, 2019 9:15:04 GMT -5
So the sky is falling again?
When did the sky start falling again?
I’m so uninformed!
Zzzzzzzzzz......
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Post by agedhippie on Nov 14, 2019 9:19:34 GMT -5
Im sure they can stop the buyout with a reverse split and an additional 100,000,000 million authorized shares to fend off the hostile takeover. That and another round of financing to boost the balance sheet before the new year. That should about do it for cash infusions for awhile. Imagine that I will be able to sleep at night knowing Mannkind wont be lost to some toxic lender, be taken over and sold off to BP for pennies and there will no longer be a need for HFM. All in my opinion. That would be tricky to do as both require board and shareholder approval which takes time assuming it is possible. The 100 million shares would need to be placed in friendly hands which would be extremely expensive for Mannkind since the recipients would need to hold onto them and not flip them (the recipients would need to be compensated for their risk). The share price would crater because of the dilution, and remain depressed because of the toxic overhang from the massive short position those shares would create (the holders would have to short to protect their capital - think the BoA short all those years ago). A reverse split would have a negative impact on the share price as we have experienced in the past and would not in itself change the voting. What it would do is get the share price back over $1 as after the share placement dilution the share price would drop by at least 40%. The key issue though is that it would seriously damage Afrezza. Nobody is going to want to be prescribing an insulin that may not be around for long. Not to mention the huge distraction this would pose to the BoD and executive. |
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Post by agedhippie on Nov 14, 2019 9:20:22 GMT -5
So the sky is falling again? When did the sky start falling again? I’m so uninformed! Zzzzzzzzzz...... No, the sky is still there. You can sleep on.  |
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Post by apidistra on Nov 14, 2019 9:47:59 GMT -5
Given the most recent conference call and the data in the fillings, I don't see the evidentiary basis for the speculation regarding "default" in the dozen or so posts above. If anyone would care to make the case for it, please do.
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Post by sportsrancho on Nov 14, 2019 10:06:10 GMT -5
SMH....wake-up! And listen to aged.
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Post by casualinvestor on Nov 14, 2019 10:43:14 GMT -5
My understanding is that if we miss the loan covenant sales targets, the loan rate goes up by 2%. Is there any other penalty? We're not in danger of "DEFAULT" on the loan. Assets are not in danger until the loan comes due.
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Post by mcbone on Nov 14, 2019 11:07:28 GMT -5
My understanding is that if we miss the loan covenant sales targets, the loan rate goes up by 2%. Is there any other penalty? We're not in danger of "DEFAULT" on the loan. Assets are not in danger until the loan comes due. Yes, my understanding is also that the interest rate will likely go up 2 pts due to the poor sales trajectory, but there is no risk of default until at least deep into 2020 or 2021. We are already seeing the "penalty" from the street due to a lackluster 3rd Qtr report and an explanation from management that leaves many believing that management is inept, at least in terms of increasing Afrezza sales. |
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Post by buyitonsale on Nov 14, 2019 11:17:00 GMT -5
Note to self, always login before looking at any threads, so I do not have to see posts from those I consider no position bashers.
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Post by agedhippie on Nov 14, 2019 17:38:50 GMT -5
My understanding is that if we miss the loan covenant sales targets, the loan rate goes up by 2%. Is there any other penalty? We're not in danger of "DEFAULT" on the loan. Assets are not in danger until the loan comes due. With the proviso that I am not a lawyer; Mannkind absolutely are in danger of defaulting on the loan. Reading the Agreement ( CREDIT AND SECURITY AGREEMENT for those having trouble sleeping) the Events of Default given in Article 10.1(c): " ... any Credit Party defaults in the performance of or compliance with any term contained in Section 6.2, 6.4, 6.5, 6.6, 6.7(a), 6.8, 6.9, 6.10, 6.13, 6.15 or 6.16, Article 7 or Article 9." That Article 9 is the Financial Covenants, and Article 9.1 within it is the Minimum Afrezza Net Revenue clause requiring Mannkind to hit the net revenue targets for Afrezza sales. Having established that failing to hit the net revenue targets constitutes a default what can MidCap do: I f a Credit Facility is accelerated following the occurrence of an Event of Default, Borrower shall immediately pay to Agent, for payment to each Lender in accordance with its respective Pro Rata Share, an amount equal to the sum of: (i) all outstanding principal of the Credit Facility and all other Obligations, plus accrued and unpaid interest thereon, (ii) any fees payable under the Fee Letters by reason of such prepayment, (iii) the Applicable Prepayment Fee as specified in the Credit Facility Schedule for the Credit Facility being prepaid, and (iv) all other sums that shall have become due and payable, including Protective Advances.Basically immediate repayment of the facility and all MidCap's expenses. Now, I think it unlikely MidCap would foreclose unless they both had a buyer lined up for the assets, and also thought their capital was at risk. Right they are making LIBOR + 6.75% with a floor for the LIBOR of 2% which translates currently to 8.75%. Better yet from their point of view while Mannkind is in default they are charged an additional 2% making 10.75% (!). There is no way MidCap gives that up without a fight. They will follow the same well trodden path as Deerfield forcing other pay outs in a stream of facility agreement modifications. For funds like MidCap Mannkind, or rather it's shareholders, are a cash cow, why kill it? |
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Post by ktim on Nov 14, 2019 17:56:22 GMT -5
Given the most recent conference call and the data in the fillings, I don't see the evidentiary basis for the speculation regarding "default" in the dozen or so posts above. If anyone would care to make the case for it, please do. It's fairly simple math. At the current growth rate of revenue, the covenants will not be met within a month or two. Obviously, the growth rate could improve, so no one can state a default is a certainty... just a strong possibility at this point, based on the past performance. |
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Post by agedhippie on Nov 14, 2019 20:38:05 GMT -5
Given the most recent conference call and the data in the fillings, I don't see the evidentiary basis for the speculation regarding "default" in the dozen or so posts above. If anyone would care to make the case for it, please do. Since you asked  Lets look at December 31st because I think that is where it falls out of bed. The net revenue YTD for Afrezza is $17.5M based on the last 10Q, and the target for December 31st is $27M. That means this quarter needs to deliver net revenue of $9.5M. Last quarter the net revenue was $6.4M (neither Brazil nor the extra rebates will reoccur so they cancel each other out) which means we need about a $3.1M increase in net revenue in a quarter. I do not see that as doable. I think we get to about $8.2M based on last year's percentage increase which is $1.3M short. It may be possible to work the books to the point that that can be covered by deferring expenses, but that simply pushes the problem into January which is traditionally a bad month, but where the net revenue needs to increase by another $1M. From that point forwards net revenue needs to continue to increase by $1M every month until next December which is a $2M increase. I think you take your pick, but the net revenue gets missed at either end December or end January, most likely both. That's the math and the case as I see it. Any corrections welcome because it is not unknown for me to miss things.  |
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