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Post by liane on Aug 23, 2013 21:14:50 GMT -5
finance.yahoo.com/mbview/threadview/;_ylt=AkfAccQP5D3hb_IqVM.L.4PeAohG;_ylu=X3oDMTB1cHB2cjA0BHBvcwMyBHNlYwNNZWRpYU1zZ0JvYXJkc1hIUlVsdA--;_ylg=X3oDMTBhYWM1a2sxBGxhbmcDZW4tVVM-;_ylv=3?&bn=0243242e-59fb-3abc-8d27-962c7bf26a1d&tid=1377304524712-6e040d15-efb5-4995-9e39-268187e8e2c6&stb=o&tls= In particular: dereklinders • 1 hour 6 minutes ago 1 users liked this posts users disliked this posts 0 Reply They won't convert until the stock is in a 2-week uptrend. That way, the 20 day Volume Weighted Average (not simple average) stock price will be at a good discount to current share price. They will convert and then immediately sell for a profit. They will never convert above market price. Why should they? Instead they can just hold back and make 9.75% a year. They don't care if the share price is $8, $7, $20, $2 or whatever. All they will care about is if they can buy at a discount then immediately sell. The current VWAP is 6.94 or thereabouts. The share price is $5.52. Deerfield would take a 25% hit if they converted. Now imagine if the last 20 day price action had been in reverse (up, not down), with the VWAP at $6.94 and the share price was at $7.27 (as it was on 7/29/2013. ). Deerfield could immediately make 4.7% on $40M = $1.9 Million. What's not to love from their perspective? That $40M in shares hitting the bid will be interesting to say the least. Understand - Deerfield will only convert when they're ready to immediately sell. Had they wanted to be shareholders, there would have been a private placement of shares instead of a debt deal. Less My mistake - a 4-week uptrend
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Post by goyocafe on Aug 23, 2013 22:55:45 GMT -5
So ride the stock quickly to 5 or less, let it rot there for as long as possible, then the day of the conversion, spike the price to 10 (or whatever) and convert. Do I have that right?
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Post by liane on Aug 24, 2013 5:16:05 GMT -5
So ride the stock quickly to 5 or less, let it rot there for as long as possible, then the day of the conversion, spike the price to 10 (or whatever) and convert. Do I have that right? I don't know - What I do know is they will want to buy low and sell high. This thread brought up one interesting opinion and that is that Deerfield would want to immediately sell the shares. I thought they would certainly drive down the price to buy, but then either sell on partnership news (they might have some idea where that is going) or even hold onto the shares a bit and short against them (that would not be good for us). The idea presented on YMB is interesting in that it guarantees an immediate profit. I would think that they would not want the days leading up to the results announcement included in the VWAP calculation period as the share price then was relatively high. So they may be thinking of a period of 20 days beginning late last week. Maybe hold the price down for the majority of that 20 day period, and then let is rise for a few days or a week? |
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Post by rak5555 on Aug 24, 2013 8:23:02 GMT -5
The past several days, it had crossed my mind that one reason mnkd would not post a rebuttal to the markets manipulation of the data was fear that it would piss off Deerfield since they may likely have been inside the 20 day window.
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Post by bobw on Aug 25, 2013 20:35:38 GMT -5
I do not believe that Deerfield can make a guaranteed profit. At the current share price, they can only convert $40 million worth of notes into shares at the VWAP. The number of shares that they will receive is between 6 and 12 million. Lets say they convert at a $6 share price, then they get 6.7 million shares. Selling that number of shares will take a few days and likely push the price down, not to mention what happens to the share price if the market finds out that they converted and are selling.
Unless the VWAP is much lower than the current share price, making a profit is not a sure thing. However considering that they bought the first $40 million tranche at a discount and only paid $21.8 million, they can make a profit on that tranche. Consider that Deerfield is still on the hook for an additional $120 million in financing, so you have to consider the entire transaction as a whole. It is not in Deerfield's interest to do things that harm the Mannkind. If the share price drops to $2.60 the remaining Oct 2014 warrants will not get exercised.
To me it looks like the discount on the first tranche and the conversion feature were designed to allow Deerfield a way to recoup some of their investment if the trial results were not good. If the results were not good, Deerfield would not have to buy the remaining 3 tranches and could have converted the first tranche. Deerfield would have a chance to get out without a large loss if the data was not good, since they only paid $21 million for the first tranche. But, they could have still suffered a loss because the share price could have gone close to zero on bad data. I don't think it was a coincidence that the first trance was 40 million and the conversion amount is $40 million if the share price is between $3.33 and $6.67 and the earliest conversion date was after the release of top line data.
It would be insider trading for Deerfield to make a trading decision based on having knowledge of the partnership agreement. Also, Mannkind cannot purposely hold back information so that they do not piss off Deerfield so that Deerfield can get a better conversion price. Think about how many securities laws they would be breaking.
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Post by liane on Aug 25, 2013 20:52:47 GMT -5
Very good points bobw. This whole topic is one which I've not formed a definitive opinion on. Certainly Deerfield has a vampire reputation - so I don't trust them further than I can throw them. On the other hand, loaning so much to MNKD seems to show confidence in the results.
They do not need to convert and / sell all at once - so that would lessen the impact on the s/p. Any idea of when such actions would have to be publicly reported?
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Post by liane on Sept 14, 2013 8:26:04 GMT -5
I do not believe that Deerfield can make a guaranteed profit. At the current share price, they can only convert $40 million worth of notes into shares at the VWAP. The number of shares that they will receive is between 6 and 12 million. Lets say they convert at a $6 share price, then they get 6.7 million shares. Selling that number of shares will take a few days and likely push the price down, not to mention what happens to the share price if the market finds out that they converted and are selling. Unless the VWAP is much lower than the current share price, making a profit is not a sure thing. However considering that they bought the first $40 million tranche at a discount and only paid $21.8 million, they can make a profit on that tranche. Consider that Deerfield is still on the hook for an additional $120 million in financing, so you have to consider the entire transaction as a whole. It is not in Deerfield's interest to do things that harm the Mannkind. If the share price drops to $2.60 the remaining Oct 2014 warrants will not get exercised. To me it looks like the discount on the first tranche and the conversion feature were designed to allow Deerfield a way to recoup some of their investment if the trial results were not good. If the results were not good, Deerfield would not have to buy the remaining 3 tranches and could have converted the first tranche. Deerfield would have a chance to get out without a large loss if the data was not good, since they only paid $21 million for the first tranche. But, they could have still suffered a loss because the share price could have gone close to zero on bad data. I don't think it was a coincidence that the first trance was 40 million and the conversion amount is $40 million if the share price is between $3.33 and $6.67 and the earliest conversion date was after the release of top line data. It would be insider trading for Deerfield to make a trading decision based on having knowledge of the partnership agreement. Also, Mannkind cannot purposely hold back information so that they do not piss off Deerfield so that Deerfield can get a better conversion price. Think about how many securities laws they would be breaking. BobW, Any thoughts now that the recent 8-k states that Deerfield will not sell the shares - assuming they do convert. No time frame is stipulated on holding shares. Can they loan them out (ostensibly to be shorted)? www.news.mannkindcorp.com/phoenix.zhtml?c=147953&p=irol-SECText&TEXT=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTkxMjEyNTgmRFNFUT0wJlNFUT0wJlNRREVTQz1TRUNUSU9OX0VOVElSRSZzdWJzaWQ9NTc%3d "Item 3.02 Unregistered Sales of Equity Securities. The information in Item 2.03 above is incorporated by reference into this Item 3.02. We relied on the exemption from registration contained in Section 4(2) of the Securities Act and Regulation D, Rule 506 thereunder, for the issuance of the Convertible Notes and expect to rely on such exemptions or Section 3(a)(9) under the Securities Act for any issuance of Conversion Shares. In connection with Deerfield’s execution of the Facility Agreement, Deerfield represented to us that it is an “accredited investor” as defined in Regulation D of the Securities Act and that the securities purchased or to be purchased by Deerfield were or will be acquired solely for its own account and for investment purposes and not with a view to the future sale or distribution by Deerfield of any portion of the Convertibles Notes or Conversion Shares. " |
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Post by babaoriley on Sept 16, 2013 11:27:39 GMT -5
If memory serves (it generally doesn't), the language highlighted is the boilerplate to ensure that the private placee (under Reg D) is not acting as an underwriter of the securities, ie, buying with a view to distribution, which would defeat the private placement exemption - a sale to accredited investors. So, I think sales of those restricted securities can be made under Rule 144, which requires, or used to anyway, a six month holding period, and a few other conditions, which are not that difficult to meet.
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Post by mannmade on Sept 16, 2013 12:48:35 GMT -5
Please forgive my ignorance on this subject but can anyone answer the following questions: 1.) What is the window for Deerfield to convert, is there a deadline? 2.) If shares continue to stay at current level, say $5.90 then why would Deerfield convert/exercise their rights with a 20 Day moving average in the low 6's. Appreciate any insight anyone can give me on this.... Thank you in advance.
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