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Post by mango on Apr 23, 2020 13:22:10 GMT -5
I would anticipate this applies to Mannkind: "Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith,” the SBA said. Here is the updated guidance, in case anyone wants to see the whole thing. In particular, the above is from Question 31. home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf31. Question: Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan? Answer: In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification. Lenders may rely on a borrower’s certification regarding the necessity of the loan request. Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. Are you saying MannKind doesn't need the PPP Loan? I think matt summed it up nicely a page or two back concerning why MannKind is justified for the Loan. Also, we have a life-saving medical product and do not turn any profit yet, so we also have potential risk of having to lay off employees (whether temporarily or otherwise), etc. It could be argued that we need the money more than the strip clubs, bars and adult entertainment stores (as one example). . |
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Post by mnkdfann on Apr 23, 2020 13:33:16 GMT -5
Here is the updated guidance, in case anyone wants to see the whole thing. In particular, the above is from Question 31. home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf31. Question: Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan? Answer: In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification. Lenders may rely on a borrower’s certification regarding the necessity of the loan request. Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. Are you saying MannKind doesn't need the PPP Loan? I think matt summed it up nicely a page or two back concerning why MannKind is justified for the Loan. I'm not really 'saying' anything; I merely provided today's updated guidance, to give context to what celo quoted earlier. Whatever matt wrote was days before today's updated guidance note came out. It may still be applicable, but that's not really my call and in any case I've no strong opinion one way or the other about that. |
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Post by rfogel on Apr 24, 2020 8:01:23 GMT -5
seekingalpha.com/news/3563773-treasury-urges-publicly-traded-companies-to-return-ppp-loans"Treasury urges publicly traded companies to return PPP loans Following objections over large publicly traded companies getting forgivable loans under the Payroll Protection Program, the U.S. Treasury issues new guidance explaining that the program is meant for companies with little access to other sources of capital, not for publicly traded companies with significant market caps. Under the process, borrowers must certify that current "economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant," the Treasury said. "It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith," according to the new guidance. Any borrower who applied for a PPP loans before the new guidance and repays the loan in full by May 7, 2020 "will be deemed by the SBA to have made the required certification in good faith." Shake Shack (NYSE:SHAK) had already said it would return all $10M of its PPP loan. Ruth's Hospitality, with $248M market cap, said will get $20M in PPP loans. Other large companies receiving PPP loans include: DMC Global (NASDAQ:BOOM), Wave Life Sciences (NASDAQ:WVE), MannKind (NASDAQ:MNKD), Lindblad Expeditions (NASDAQ:LIND), Legacy Housing (NASDAQ:LEGH), Misonix (NASDAQ:MSON), Digimarc (NASDAQ:DMRC), Fiesta Restaurant Group (NASDAQ:FRGI), Optinose (NASDAQ:OPTN), Quantum (NASDAQ:QMCO), New Age Beverages (NASDAQ:NBEV), Aquestive Therapeutics (NASDAQ:AQST), Escalade (NASDAQ:ESCA), Zagg (NASDAQ:ZAGG), and Veritone (NASDAQ:VERI)."
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Post by agedhippie on Apr 24, 2020 9:29:25 GMT -5
Are you saying MannKind doesn't need the PPP Loan? I think matt summed it up nicely a page or two back concerning why MannKind is justified for the Loan. Also, we have a life-saving medical product and do not turn any profit yet, so we also have potential risk of having to lay off employees (whether temporarily or otherwise), etc. ... The question the treasury is asking is whether you have another viable route to money, not is it the cheapest route. The basic question is whether the company will become insolvent if it doesn't take the treasury loan, not will the shareholders suffer, and the answer to that is obviously no. What the Treasury has done here is quite interesting. They haven't demanded the money back, instead they have set the price of the money at a formal statement by the company that they are imminent danger of bankruptcy. That statement would not give the institutional investors the warm and fuzzies, and may well force divestiture (if a company says it's in imminent danger of bankruptcy risk management is not going to let them hold the stock). Oddly this is where MNKD's high tracker fund holdings may help because those institutions cannot sell as it would minimize the impact. |
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Post by cretin11 on Apr 24, 2020 10:05:52 GMT -5
We have access to money but only from predatory lenders, so I hope we can ride out this bit of negative publicity (plus at least it’s SOME publicity) and folks won’t really care in a few days. Kinda like Richard Burr who made a smooth couple mil $$ with his insider trading scam, people were upset for a day or two but have moved on to newer stories.
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Post by matt on Apr 24, 2020 10:27:44 GMT -5
We have access to money but only from predatory lenders, so I hope we can ride out this bit of negative publicity (plus at least it’s SOME publicity) and folks won’t really care in a few days. The exact quote from the Treasury is that it is “ unlikely that a public company with substantial market value and access to capital markets” would be able to demonstrate a good faith need under the program. Mid-cap is a hard-money lender, but the company has access to the financial markets and a market cap of almost $300 million so MNKD will be hard pressed to not return the money. Sure, the government money is attractive and carries a better interest rate but that is not the point. The SBA is supposed to be a lender of last resort and MNKD has options even if those are not attractive options. As I said in my earlier post, jobs are jobs, and any loan that saves a lot of jobs is better than cranking up the unemployment check machine. However, since Mike has publicly stated that he is not worried about staying funded in 2020, the Treasury guidance will put the company squarely between the proverbial rock and a hard place. Does MNKD really want to go on record with the government that the company is approaching insolvency right when they are attempting to increase the share authorization? I think the smart move is to pay the loan down by May 7th as Treasury has requested. |
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Post by mango on Apr 24, 2020 10:54:21 GMT -5
We have access to money but only from predatory lenders, so I hope we can ride out this bit of negative publicity (plus at least it’s SOME publicity) and folks won’t really care in a few days. The exact quote from the Treasury is that it is “ unlikely that a public company with substantial market value and access to capital markets” would be able to demonstrate a good faith need under the program. Mid-cap is a hard-money lender, but the company has access to the financial markets and a market cap of almost $300 million so MNKD will be hard pressed to not return the money. Sure, the government money is attractive and carries a better interest rate but that is not the point. The SBA is supposed to be a lender of last resort and MNKD has options even if those are not attractive options. As I said in my earlier post, jobs are jobs, and any loan that saves a lot of jobs is better than cranking up the unemployment check machine. However, since Mike has publicly stated that he is not worried about staying funded in 2020, the Treasury guidance will put the company squarely between the proverbial rock and a hard place. Does MNKD really want to go on record with the government that the company is approaching insolvency right when they are attempting to increase the share authorization? I think the smart move is to pay the loan down by May 7th as Treasury has requested. The smart thing to do would be for the executives to take an additional 20-30% pay cut on top of the standing 20% pay cut—to use for paying the loan back and to also be more financially responsible and frugal. |
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Post by radgray68 on Apr 24, 2020 11:18:28 GMT -5
I thought the idea was we'll suspend a couple pipeline programs, keep employing a full workforce, AND use some of our personnel and expertise to tackle the interstitial pneumonia in the deep lung that results from runaway covid infections. In return, we get access to a short term, low-interest loan that a million and a half others have already been approved for.
How's that for a public relations spin?
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Post by agedhippie on Apr 24, 2020 13:07:36 GMT -5
I thought the idea was we'll suspend a couple pipeline programs, keep employing a full workforce, AND use some of our personnel and expertise to tackle the interstitial pneumonia in the deep lung that results from runaway covid infections. In return, we get access to a short term, low-interest loan that a million and a half others have already been approved for. How's that for a public relations spin? The problem isn't PR (well, it is but only a little.) The problem is that the Treasury is going to ask if the loan is the only alternative to bankruptcy, and for Mannkind the answer is no. |
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Post by longliner on Apr 24, 2020 13:11:31 GMT -5
I thought the idea was we'll suspend a couple pipeline programs, keep employing a full workforce, AND use some of our personnel and expertise to tackle the interstitial pneumonia in the deep lung that results from runaway covid infections. In return, we get access to a short term, low-interest loan that a million and a half others have already been approved for. How's that for a public relations spin? The problem isn't PR (well, it is but only a little.) The problem is that the Treasury is going to ask if the loan is the only alternative to bankruptcy, and for Mannkind the answer is no. I must have missed the loan criteria that stated imminent bankruptcy was a loan condition. |
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Post by cretin11 on Apr 24, 2020 14:04:09 GMT -5
Agree, “imminent bankruptcy” isn’t a condition. Here’s the language cited above:
“Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.”
It can be argued that using our existing available financing sources is significantly detrimental to the business. A lot of us have certainly been saying that.
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Post by matt on Apr 25, 2020 7:26:43 GMT -5
Agree, “imminent bankruptcy” isn’t a condition. Here’s the language cited above: “Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” It can be argued that using our existing available financing sources is significantly detrimental to the business. A lot of us have certainly been saying that. The other factor that Treasury will look into is the impact of the virus on business operations. Frankly, I am surprised at how well script numbers and the associated revenues have held up during the crisis. If MNKD were a retailer than lost essentially 100% of sales for an entire quarter or a restaurant that was reduced to running with a limited take-out menu that only brings in 10-15% of normal orders then that would be different. Yes, the financing sources MNKD has are not particularly friendly. but it is hard to argue in good faith that in the absence of the PPP loan than the company would be doing significantly less business. Ultimately the program was put in place to preserve jobs at companies that were particularly hard hit and the Symphony script data does not show much of a negative impact when " taking into account their current business activity" which is the standard Treasury has elected to apply. |
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Post by hellodolly on Apr 25, 2020 9:02:06 GMT -5
"Any borrower who applied for a PPP loans before the new guidance and repays the loan in full by May 7, 2020 "will be deemed by the SBA to have made the required certification in good faith." - This is a statement that is offering amnesty, "an out" for publicly traded companies to give back the money, "No harm, no foul." While it would be a nice to keep the money, it would be nicer to return it and say...ooops, we acted in good faith but there are other smaller businesses that need this funding more than we do.
I thought the intention of the program was to help our neighborhood businesses survive the shut down? I hope MNKD doesn't take the stance that they are going to keep it because they've heard or know of other companies that aren't giving it back, or Legal says..."We're ok." There is a big difference between 'doing the right thing and doing things right". This was not right.
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Post by porkini on Apr 25, 2020 9:07:47 GMT -5
"Any borrower who applied for a PPP loans before the new guidance and repays the loan in full by May 7, 2020 "will be deemed by the SBA to have made the required certification in good faith." - This is a statement that is offering amnesty, "an out" for publicly traded companies to give back the money, "No harm, no foul." While it would be a nice to keep the money, it would be nicer to return it and say...ooops, we acted in good faith but there are other smaller businesses that need this funding more than we do. I thought the intention of the program was to help our neighborhood businesses survive the shut down? I hope MNKD doesn't take the stance that they are going to keep it because they've heard or know of other companies that aren't giving it back, or Legal says..."We're ok." There is a big difference between 'doing the right thing and doing things right". This was not right. Agreed! |
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Post by mango on Apr 25, 2020 9:18:03 GMT -5
If MannKind needs to repay the loan because there will be legal/financial ramifications against them if they do not, I suggest Executive Management forfeit their 2019 performance compensations, whether those are in the form of bonuses and/or salary increases, they should all be forfeited, along with adding an additional 20-30% pay cut for Executive Management on top of the current standing 20% pay cut.
When all of those are combined, we should remain in good shape and be able to pay the loan back while also still saving a significant amount of cash burn during this catastrophic economic collapse and planetary pandemic.
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