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Post by cjm18 on Dec 19, 2022 8:47:37 GMT -5
To earn 9% of $30+ million? i.e,. bother to earn $2.7M. How much would you let the price rise before converting? What are the drivers that trigger conversion? Is there a tax advantage to converting lower? Or a disadvantage? Don't know, but your question is a good one, so I hope one of the more knowledgeable folks (which may include you) can help answer it. Could be better to convert in early 2023 (Jan). Yes to avoid taxes for a year. $0.09 times 14m is chump change. |
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Post by Thundersnow on Dec 19, 2022 9:32:44 GMT -5
Another thought...If they convert soon the SHORT COUNT will be reduced drastically since their hedge will be removed. There are covenants to the convertible so it's not that easy to convert.
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Post by prcgorman2 on Dec 19, 2022 10:30:41 GMT -5
Did some research to understand whether conversion of bonds is a reportable event. It doesn't look to me like conversion of debt requires a filing with the SEC. I assume the terms of the bonds are not public, and it is unlikely (but possible) there is a mandatory conversion at the $5.10 conversion price.
My guess is we won't know whether or not the holder of the debt converted the debt to equity until we can see the Balance Sheet at the next earnings report.
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Post by agedhippie on Dec 19, 2022 17:38:03 GMT -5
I think if you were taking that particular bet you would be have to be expecting DPI to contribute considerably more to the bottom line. Afrezza would be viewed as a wash (breakeven) so it could be ignored. Not necessarily. It could also happen that one of the big 3 could recognize chances were better than even that Mannkind and Afrezza aren't going away and now is the last chance to acquire them at a less than egregious cost. I would expect an offer to be 2x to 3x current share price. I suspect that might be sufficient to ensure approval by the board and shareholders. I assume it would be the end for Afrezza. That bothers me. Especially since I may become a Type 2 diabetic and I've been counting on being able to use a CGM and Afrezza to manage my diabetes.
But, I may have too great of a bias about Mannkind. 2x or 3x is a lot of money and the competitors may just (continue to) be unconcerned about Afrezza, so no reason to do anything in that regard. In that case, your view would be correct. It will be a frost day in hell before there is a 2x or 3x offer.  Nothing to do with Mannkind, but rather that deals don't get done with those multiples pretty much regardless (there may be one or two in very weird cases, but this is not sufficiently weird!) This is not really how M&A works. There needs to be a concrete strategic driver and right now that is missing. From the big three standpoint they don't have to bother about Afrezza because it's market share is so small. Will it grow after the pediatrics trial? Yes, but to what extent? They can't quantify that so they cannot price it - that's a show stopper since they cannot price that revenue into the deal so the offer will be pretty awful. |
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Post by agedhippie on Dec 19, 2022 17:51:52 GMT -5
Did some research to understand whether conversion of bonds is a reportable event. It doesn't look to me like conversion of debt requires a filing with the SEC. I assume the terms of the bonds are not public, and it is unlikely (but possible) there is a mandatory conversion at the $5.10 conversion price. My guess is we won't know whether or not the holder of the debt converted the debt to equity until we can see the Balance Sheet at the next earnings report. The terms of the bonds are public for listed companies because investors need to be able to assess them. If you have access to a Bloomberg terminal (some big public libraries have them) you can see the ask and bid prices on the bonds. Conversion is a tricky proposition because people buy bonds for the revenue stream so the issuer would have to grant a hefty discount for that right. For that reason bonds allowing forced conversion are vanishing rare. Convertible bonds are a different matter, but they still typically don't allow forced conversion. You can get forced conversion with warrants and prefs (I've had both happen to me at varying times), but again it needs to be written into the terms. |
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Post by prcgorman2 on Dec 19, 2022 19:48:34 GMT -5
Did some research to understand whether conversion of bonds is a reportable event. It doesn't look to me like conversion of debt requires a filing with the SEC. I assume the terms of the bonds are not public, and it is unlikely (but possible) there is a mandatory conversion at the $5.10 conversion price. My guess is we won't know whether or not the holder of the debt converted the debt to equity until we can see the Balance Sheet at the next earnings report. The terms of the bonds are public for listed companies because investors need to be able to assess them. If you have access to a Bloomberg terminal (some big public libraries have them) you can see the ask and bid prices on the bonds. Conversion is a tricky proposition because people buy bonds for the revenue stream so the issuer would have to grant a hefty discount for that right. For that reason bonds allowing forced conversion are vanishing rare. Convertible bonds are a different matter, but they still typically don't allow forced conversion. You can get forced conversion with warrants and prefs (I've had both happen to me at varying times), but again it needs to be written into the terms. Thanks for the reinforcement on convertible bond information agedhippie, and for the commentary on multiples (or not as the case may be) for buyout pricing. |
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Post by akemp3000 on Dec 19, 2022 22:50:11 GMT -5
Opinions stated strongly as if they are facts will always remain just opinions. Thankfully, this message board has lots of both  |
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Post by agedhippie on Dec 20, 2022 6:13:49 GMT -5
Not necessarily. It could also happen that one of the big 3 could recognize chances were better than even that Mannkind and Afrezza aren't going away and now is the last chance to acquire them at a less than egregious cost. I would expect an offer to be 2x to 3x current share price. I suspect that might be sufficient to ensure approval by the board and shareholders. I assume it would be the end for Afrezza. That bothers me. Especially since I may become a Type 2 diabetic and I've been counting on being able to use a CGM and Afrezza to manage my diabetes.
But, I may have too great of a bias about Mannkind. 2x or 3x is a lot of money and the competitors may just (continue to) be unconcerned about Afrezza, so no reason to do anything in that regard. In that case, your view would be correct. It will be a frost day in hell before there is a 2x or 3x offer. Nothing to do with Mannkind, but rather that deals don't get done with those multiples pretty much regardless (there may be one or two in very weird cases, but this is not sufficiently weird!) This is not really how M&A works. There needs to be a concrete strategic driver and right now that is missing. From the big three standpoint they don't have to bother about Afrezza because it's market share is so small. Will it grow after the pediatrics trial? Yes, but to what extent? They can't quantify that so they cannot price it - that's a show stopper since they cannot price that revenue into the deal so the offer will be pretty awful. Matt describes what I am trying to say far better in this post - mnkd.proboards.com/post/99519The summary is that almost all deals are done for an under 35% premium, in some weird cases it may go over 50%. Nobody is going for 200 to 300% premiums. Matt explains why in his post, but the summary is that the purchase needs to be justified to the acquirer's shareholders who tend to react badly to purchases that reduce the share price. It is worth doing a search for posts from Matt and with the search term buyout. |
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Post by thekid2499 on Dec 20, 2022 8:46:39 GMT -5
I agree that deals aren't typically done for over a 50% premium. But that doesn't tell the whole story. Typically when there is a potential buyout or speculation of a buyout, the stock runs up prior to the deal being done. So you need to factor that in as well. The buyout premium may only be 35%, but the stock may have run up some large percentage prior to the actual deal.
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Post by akemp3000 on Dec 20, 2022 9:31:37 GMT -5
I agree that deals aren't typically done for over a 50% premium. But that doesn't tell the whole story. Typically when there is a potential buyout or speculation of a buyout, the stock runs up prior to the deal being done. So you need to factor that in as well. The buyout premium may only be 35%, but the stock may have run up some large percentage prior to the actual deal. Precisely. Some might think Mannkind could actually be purchased today for 2X or 3x which, based on a currently valuation of approximately $5 would only be $10 or $15. It's now reasonable to foresee the pps reaching $10 or $15 in the not too distant future. This means the actual purchase price at 2X or 3X could be $45. This wild variation could happen quickly. And to your point, a BP with its eye on Mannkind could easily see this evolving as well. To believe a CEO could not make such a deal for a company with advanced science that has several disrupting opportunities in huge markets is not giving sufficient credit to a forward thinking, risk taking CEO. Sure there would be shareholders that wouldn't agree. It's exactly these kinds of decisions that create legendary CEOs...or former CEOs |
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Post by cretin11 on Dec 20, 2022 11:47:11 GMT -5
I am in support of us hiring a forward thinking, risk taking CEO that will fetch us $45 per share in a buyout.
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Post by joeypotsandpans on Dec 20, 2022 12:13:33 GMT -5
Peppy do you mean the run up to $6.25 or $12 (your targets) that you have shown us on your charts? both, one into another. Price should be at $12 in a few months, less than 6 months? Then hold for $20. the 200 month the .382? A coiled spring is what they say with this stuff. Do you see a coiled spring the last two years? joeypotsandpans  :max_bytes(150000):strip_icc()/CupandHandleDefinition2_2-70d8f43bbe4c4119a0feddd1976e4ed6.png) To simplify, stocks making 52 week highs in the midst of bear markets should not be taken lightly. Happy Holidays everyone 🎅😉 |
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Post by agedhippie on Dec 20, 2022 12:46:03 GMT -5
I agree that deals aren't typically done for over a 50% premium. But that doesn't tell the whole story. Typically when there is a potential buyout or speculation of a buyout, the stock runs up prior to the deal being done. So you need to factor that in as well. The buyout premium may only be 35%, but the stock may have run up some large percentage prior to the actual deal. That's true where the run up is over an extended period, and there are some shares that are supported over long periods by exactly that expectation. In pricing M&A the most important thing for the buyer is to accurately value the company. If the current market price is greater than the valuation (eg. it has run up to far for the buyer) they will walk away because the deal will not get done at a price they think works. If the price starts to rise it simply eats into the premium - the number the board approves is absolute, it's not relative to the share price. |
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Post by agedhippie on Dec 20, 2022 12:58:11 GMT -5
Precisely. Some might think Mannkind could actually be purchased today for 2X or 3x which, based on a currently valuation of approximately $5 would only be $10 or $15. It's now reasonable to foresee the pps reaching $10 or $15 in the not too distant future. This means the actual purchase price at 2X or 3X could be $45. ... Anyone who thinks a buyer would buy MNKD today for 2x or 3x is doomed to disappointment. That's a 200% to 300% premium! To a very large extent buyers go after undervalued companies because they can buy them cheaply, not so they can pay the market rate. |
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Post by peppy on Dec 20, 2022 13:00:10 GMT -5
Precisely. Some might think Mannkind could actually be purchased today for 2X or 3x which, based on a currently valuation of approximately $5 would only be $10 or $15. It's now reasonable to foresee the pps reaching $10 or $15 in the not too distant future. This means the actual purchase price at 2X or 3X could be $45. ... Anyone who thinks a buyer would buy MNKD today for 2x or 3x is doomed to disappointment. That's a 200% to 300% premium! To a very large extent buyers go after undervalued companies because they can buy them cheaply, not so they can pay the market rate. at $12 a share, recalculate the % premium. MNKD is going to $12, for now. As sure as the Nasdaq went to 10,000. |
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Nothing to do with Mannkind, but rather that deals don't get done with those multiples pretty much regardless (there may be one or two in very weird cases, but this is not sufficiently weird!)
