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Post by celo on Apr 28, 2020 8:40:58 GMT -5
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Post by mango on Apr 28, 2020 9:01:30 GMT -5
My mistake, it appears MannKind has less than 300 employees.
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Post by mango on Apr 28, 2020 9:11:57 GMT -5
There is plenty of small businesses that have received the PPP Loan whose businesses have not been impacted by the pandemic and have not taken a financial hit. Those businesses are not justified for PPP Loan but received it anyways. It appears lawmakers have made major flaws in the Bill altogether. I find it ironic people will criticize MannKind for taking the Loan but not other small businesses that took the Loan who have no justification for taking it. |
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Post by agedhippie on Apr 28, 2020 9:30:49 GMT -5
You are perfectly correct that lawmakers only have themselves to blame form not being accurate. However, I expect the lawmakers to be more than capable of penalizing companies either directly or, more likely, indirectly. The optics are of greedy public companies stealing money from mom and pop businesses - politicians will happily exploit that. Repaying the loan by May 5th is the best route and gains positive PR. Baloney. There wasn't enough money in the first round and that was the problem. The money was allocated to save jobs. There's a formula that 75% needs to be used for payroll. A job is a job is a job saved. There will be a 3rd round also because that's my opinion. Hippie always spins to the negative. It's just the way he works here. Negative or not, I was still correct as can be seen from Mnuchin's interview where he announced that it is going to audit every company who took over $2M. Since Mannkind had already announced it is going to issue 40% more shares the liquidity argument is going to be hard to make. This is nothing to do with the technical argument over conditions, it's purely politicial because the government is taking flack over this and wants to deflect blame with the ever popular "greedy Wall Street companies" argument. |
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Post by agedhippie on Apr 28, 2020 9:37:09 GMT -5
There is plenty of small businesses that have received the PPP Loan whose businesses have not been impacted by the pandemic and have not taken a financial hit. Those businesses are not justified for PPP Loan but received it anyways. It appears lawmakers have made major flaws in the Bill altogether. I find it ironic people will criticize MannKind for taking the Loan but not other small businesses that took the Loan who have no justification for taking it. I don't criticize Mannkind or anyone else for taking the loan, it's very cheap money even if the loan isn't forgiven. Now the goalposts have been moved that has to be weighed against the PR damage and the government's ill will. |
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Post by liane on Apr 28, 2020 9:58:31 GMT -5
I am a little conflicted on this, but here is where I currently stand (all IMO of course)— MannKind is not a mega conglomerate BP company. They have less than 400 employees. They qualify as a small business IMO (despite them being a public company), and are justified for the Loan. If they give it back fine, and if they do not give it back, fine. They were following the rules as initially written. They would have been foolish not to apply. But now that Congress is clarifying their expectation, they may want to reconsider. I'm with you, either way is fine with me as long as they can back ip their reasoning. |
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Post by matt on Apr 28, 2020 11:51:01 GMT -5
The latest SBA documents make clear that the borrower must certify “. . .current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Given that MNKD continues to qualify for additional tranches of debt from Mid-Cap and that script revenue has not declined materially from Q4, I think that is an impossible certification to make in good faith.
Essentially the law requires each borrower to show that the uncertainty caused by the COVID crisis makes it impossible for the company to continue its normal operations. Certainly MNKD has its share of business challenges, from poor script numbers to taking money from hard money lenders, but arguably those conditions existed well-before the COVID crisis and those conditions have not deteriorated further due to COVID. If an earthquake suddenly destroyed MNKD headquarters this afternoon that would be unfortunate, but that too would be a business risk that has nothing to do with the virus.
The other thing to consider is what happens if MNKD does not repay the money by May 7th. SBA has indicated that they will audit 100% of the loans over $2 million, and if MNKD is found to have made a false certification then there is the potential for treble civil damages, and criminal fines on top of that. It might also trigger the cross-default language in the Mid-Cap loan documents which would make those loans immediately repayable. Are those prudent risks worth taking given that Mid-Cap calling their loan would either render the company insolvent or else open the Mid-Cap terms up to renegotiation on much worse terms? Mid-Cap would not want the company in bankruptcy court any more than the shareholder would, but they are precisely the type of lender that will threaten to do so if it gives them the leverage they need to impose even tougher terms for the existing debt. SBA has to make an example of somebody and MNKD is an easier target than the LA Lakers.
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Post by longliner on Apr 28, 2020 12:50:44 GMT -5
The latest SBA documents make clear that the borrower must certify “ . . .current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Given that MNKD continues to qualify for additional tranches of debt from Mid-Cap and that script revenue has not declined materially from Q4, I think that is an impossible certification to make in good faith. Essentially the law requires each borrower to show that the uncertainty caused by the COVID crisis makes it impossible for the company to continue its normal operations. Certainly MNKD has its share of business challenges, from poor script numbers to taking money from hard money lenders, but arguably those conditions existed well-before the COVID crisis and those conditions have not deteriorated further due to COVID. If an earthquake suddenly destroyed MNKD headquarters this afternoon that would be unfortunate, but that too would be a business risk that has nothing to do with the virus. The other thing to consider is what happens if MNKD does not repay the money by May 7th. SBA has indicated that they will audit 100% of the loans over $2 million, and if MNKD is found to have made a false certification then there is the potential for treble civil damages, and criminal fines on top of that. It might also trigger the cross-default language in the Mid-Cap loan documents which would make those loans immediately repayable. Are those prudent risks worth taking given that Mid-Cap calling their loan would either render the company insolvent or else open the Mid-Cap terms up to renegotiation on much worse terms? Mid-Cap would not want the company in bankruptcy court any more than the shareholder would, but they are precisely the type of lender that will threaten to do so if it gives them the leverage they need to impose even tougher terms for the existing debt. SBA has to make an example of somebody and MNKD is an easier target than the LA Lakers. Why do you indicate that MNKD may have made a false certification? If it becomes a 1% loan it is access to reasonable money, so be it. |
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Post by awesomo on Apr 28, 2020 13:07:40 GMT -5
Lakers already gave the loan back. MannKind is certainly not getting singled out, other more known brands have already been publicly shamed into returning the loans.
So while MannKind was certainly in their rights to claim it and it’s the government’s fault for allowing these businesses access to it, the optics from this point on are on the management team.
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Post by goyocafe on Apr 28, 2020 13:24:29 GMT -5
Lakers already gave the loan back. MannKind is certainly not getting singled out, other more known brands have already been publicly shamed into returning the loans. So while MannKind was certainly in their rights to claim it and it’s the government’s fault for allowing these businesses access to it, the optics from this point on are on the management team. Is it still their plan to take their bonuses for 2019? I find that optic even more disturbing, especially after taking the loan. |
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Post by awesomo on Apr 28, 2020 13:29:44 GMT -5
Lakers already gave the loan back. MannKind is certainly not getting singled out, other more known brands have already been publicly shamed into returning the loans. So while MannKind was certainly in their rights to claim it and it’s the government’s fault for allowing these businesses access to it, the optics from this point on are on the management team. Is it still their plan to take their bonuses for 2019? I find that optic even more disturbing, especially after taking the loan. They haven't said anything to the contrary, but I guess we will find out once the "vote" passes at the virtual ASM. |
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Post by nylefty on Apr 28, 2020 14:53:37 GMT -5
$500 billion bailout plan for large companies has no requirements to preserve jobs or limit executive pay
The Federal Reserve’s coronavirus aid program lacks restrictions Congress placed on companies seeking financial help under other programs.
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Post by mnkdfann on Apr 28, 2020 15:15:49 GMT -5
$500 billion bailout plan for large companies has no requirements to preserve jobs or limit executive pay
The Federal Reserve’s coronavirus aid program lacks restrictions Congress placed on companies seeking financial help under other programs.
So, large companies have better lobbyists? Actually, that story is behind a paywall and I can only read the first couple of paragraphs. Are details of the new plan for large companies finalised or a work in progress? |
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Post by nylefty on Apr 28, 2020 15:48:44 GMT -5
$500 billion bailout plan for large companies has no requirements to preserve jobs or limit executive pay
The Federal Reserve’s coronavirus aid program lacks restrictions Congress placed on companies seeking financial help under other programs.
So, large companies have better lobbyists? Actually, that story is behind a paywall and I can only read the first couple of paragraphs. Are details of the new plan for large companies finalised or a work in progress?
Here's more of the article. Much of the Post's pandemic coverage is not behind the paywall, but apparently this article is. I subscribe to the Post's digital version ($29 a year).
Under the program, the central bank will buy up to $500 billion in bonds issued by large companies. The companies will use the influx of cash as a financial lifeline but are required to pay it back with interest.
Unlike other portions of the relief for American businesses, however, this aid will be exempt from rules passed by Congress requiring recipients to limit dividends, executive compensation and stock buybacks and does not direct the companies to maintain certain employment levels.
Critics say the program could allow large companies that take the federal help to reward shareholders and executives without saving any jobs. The program was set up jointly by the Federal Reserve and the Treasury Department.
“I am struck that the administration is relying on the good will of the companies receiving this assistance,” said Eswar Prasad, a former official at the International Monetary Fund and economist at Cornell University. “A few months down the road, after the government purchases its debt, the company can turn around and issue a bunch of dividends to shareholders or fire its workers, and there’s no clear path to get it back.” |
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Post by matt on Apr 28, 2020 16:55:14 GMT -5
Why do you indicate that MNKD may have made a false certification? If it becomes a 1% loan it is access to reasonable money, so be it. Because there are two separate issues here. The first is whether they made the necessary certifications in good faith. Based on what MNKD and others knew when they applied for the loan they could plausibly have made such certification without any evil intent, however, SBA has now clarified what standards they will apply when reviewing those certifications. You cannot fault a company for applying based on the rules that were published at the time. SBA realizes the problems the lack of clear regulations caused, hence they implemented the May 7th deadline for returning the money in exchange for SBA's acknowledgement that any certifications were, in fact, made in good faith. That eliminates any risk of negative consequences (other than loss of the money of course). All PPP loans are 1% loans for two years with the possibility of forgiveness, including accrued interest. It is not the case that a company ineligible to apply for the loan, but got one anyway, can simply repay the loan at the end of year two. If the SBA determines that a company was not eligible, then that borrower has a problem. Again, was it a little bit unfair to publish an initial set of rules that many companies relied upon only to change the rules after the fact? No doubt, that does not meet the "but it ain't fair" test. In fact, I might suggest that if MNKD hadn't applied for a loan based on what was known at the time they applied then management would have been negligent in not doing so. Management did nothing particularly wrong, but now that the rules have been clarified they need to undo what they did previously to avoid the fallout. As the French say "c'est la vie". |
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