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Post by EveningOfTheDay on Jul 31, 2015 13:09:46 GMT -5
So I followed up Matt's answer with the following,
Would it be fair to assume that by offering this deal MNKD is trying to encourage conversion among the holders of the old notes, at the same time keeping things from spiraling out of control by setting a floor that is under MNKD’s control.
Would it also be fair to say, that although MNKD would seem to prefer conversion as a way to resolve the debt notes, the company is ready to pay the debt if it needs be. I assume here that refinancing was offered as a preferred option but only a fraction of the old note holders, representing an aggregate principal amount of $27.7 million, were interested in extending terms.
Minutes later I got his answer,
"The first would be fair.
As far as extensions of old notes, we were only willing to do this for fundamental investors, who don't short or need a borrow facility. That is the reason for the amount. We also could not approach more than a handful of note holders as doing so would trigger different legal rules around a tender offer we needed to avoid given our timeline."
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Post by liane on Jul 31, 2015 13:20:20 GMT -5
So it sounds like they are attempting to tame the short games - would that be fair to say?
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Post by dreamboatcruise on Jul 31, 2015 13:20:32 GMT -5
@eveningoftheday... Many thanks. Taken at face value that is some assurance... i.e. I'm reading this that they will not be chasing things down by resetting the floor lower. So hopefully at time of CC the results will be fully known and how much ever they have repaid vs exchanged, Matt will give clear indication of how they will navigate cash flow over coming quarters.
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Post by dreamboatcruise on Jul 31, 2015 13:24:26 GMT -5
So it sounds like they are attempting to tame the short games - would that be fair to say? I don't think this has anything to do with the shorts... but if it was supposed to tame that, it wasn't very successful. |
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Post by jpg on Jul 31, 2015 13:32:30 GMT -5
It's a good explanation that, if given publicly might have made the conversion easier. The way things are going there will be little conversion and the shorts will again be in control of the price.
Mannkind management doesn't have an easy job but a bit more communication of intentions might go a long way.
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Post by EveningOfTheDay on Jul 31, 2015 13:33:38 GMT -5
So it sounds like they are attempting to tame the short games - would that be fair to say? I think that is clear. Perhaps MNKD recognizes that SI has become, at this time, a major inconvenience that is seriously hindering their alternatives as well as what they consider the sp fair value could be, or perhaps they think, now that they are dealing with the notes, that they might be able to not only start putting and end to the issues created by the massive SI but also increase the rate at which this is resolved. Whatever the reason, they seem intent on, as you said, trying to tame the situation. |
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Post by EveningOfTheDay on Jul 31, 2015 13:36:23 GMT -5
I don't think this has anything to do with the shorts... but if it was supposed to tame that, it wasn't very successful. I think it is early to say, but I do think that short interest has become, now that Afrezza is out, much more of a concern and that the company is trying to do something about it coinciding with the resolution to the August 15 notes. Time will tell if there is a substantial enough change or not. |
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Post by dreamboatcruise on Jul 31, 2015 13:41:40 GMT -5
So it sounds like they are attempting to tame the short games - would that be fair to say? I think that is clear. Perhaps MNKD recognizes that SI has become, at this time, a major inconvenience that is seriously hindering their alternatives as well as what they consider the sp fair value could be, or perhaps they think, now that they are dealing with the notes, that they might be able to not only start putting and end to the issues created by the massive SI but also increase the rate at which this is resolved. Whatever the reason, they seem intent on, as you said, trying to tame the situation. I disagree. Having the ability to reset the floor lower simply played into the shorts hands. It is what allowed AF to talk of "death spiral". This fed the shorts not tamed them. If they wanted to not hand the shorts food, they should have set the floor as absolute and made it clear they had the cash and would simply pay off if the floor wasn't met and give clear reassurance that in any case they would not be desperate for cash later needing to do a secondary... or something along the lines of, we are confident we have the cash to last us through X quarters even after paying off all notes not exchanged at the floor price. |
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Post by EveningOfTheDay on Jul 31, 2015 13:46:38 GMT -5
It's a good explanation that, if given publicly might have made the conversion easier. The way things are going there will be little conversion and the shorts will again be in control of the price. Mannkind management doesn't have an easy job but a bit more communication of intentions might go a long way. Not sure if any explanation would have made conversion easier. Note holders, I assume, were given plenty of explanation. If they choose not to convert will be, most likely, for other reasons (the type I rather not think about). The point of the floor price was precisely to not let things out of control regardless of the outcome. I will be curious to see, as if it appears little conversion occurs, how will MNKD settle the notes, but in any case shorts have been and still are in control. At least now we know MNKD is trying to take progressive steps, with in reasonable options, to change that. |
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Post by EveningOfTheDay on Jul 31, 2015 13:53:23 GMT -5
I disagree. Having the ability to reset the floor lower simply played into the shorts hands. It is what allowed AF to talk of "death spiral". This fed the shorts not tamed them. If they wanted to not hand the shorts food, they should have set the floor as absolute and made it clear they had the cash and would simply pay off if the floor wasn't met and give clear reassurance that in any case they would not be desperate for cash later needing to do a secondary... or something along the lines of, we are confident we have the cash to last us through X quarters even after paying off all notes not exchanged at the floor price. Consider that they have the ability to do so, but not have done so in the first two days, since changes in the floor would have to be announced, I believe, as per the agreement. However, I agree with you that the deal does not inspire lots of confidence. I honestly do not think cash will be a problem if it comes down to it, but that does not mean MNKD does not have a preference at to how and when cash is spend. |
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Post by jpg on Jul 31, 2015 14:07:49 GMT -5
I disagree. Having the ability to reset the floor lower simply played into the shorts hands. It is what allowed AF to talk of "death spiral". This fed the shorts not tamed them. If they wanted to not hand the shorts food, they should have set the floor as absolute and made it clear they had the cash and would simply pay off if the floor wasn't met and give clear reassurance that in any case they would not be desperate for cash later needing to do a secondary... or something along the lines of, we are confident we have the cash to last us through X quarters even after paying off all notes not exchanged at the floor price. Consider that they have the ability to do so, but not have done so in the first two days, since changes in the floor would have to be announced, I believe, as per the agreement. However, I agree with you that the deal does not inspire lots of confidence. I honestly do not think cash will be a problem if it comes down to it, but that does not mean MNKD does not have a preference at to how and when cash is spend. Agree with our cold blooded green one. I originally thought this was a reasonable deal until the shorts called Mannkinds bluff and lowered the price just enough so as to force Mannkind to react (which they haven't done so far). Now the shorts have lowered the price below the conversion rate management looks like they are negotiating from a weak position (and maybe they are). This could have been presented very differently so as to not feed the shorts. This deal was almost an open invitation to lower the price just enough so as to not get the deal done. If management wasn't expecting this to happen I don't get it. Had they stated like our lizard friend that conversion was their preferred mean of payment but they were financially ok for 1 year even without conversion we might be in a different place right now? I'm by far an expert on these deals but they should have seen this coming no? |
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Post by obamayoumama on Jul 31, 2015 14:12:41 GMT -5
I think that is clear. Perhaps MNKD recognizes that SI has become, at this time, a major inconvenience that is seriously hindering their alternatives as well as what they consider the sp fair value could be, or perhaps they think, now that they are dealing with the notes, that they might be able to not only start putting and end to the issues created by the massive SI but also increase the rate at which this is resolved. Whatever the reason, they seem intent on, as you said, trying to tame the situation. I disagree. Having the ability to reset the floor lower simply played into the shorts hands. It is what allowed AF to talk of "death spiral". This fed the shorts not tamed them. If they wanted to not hand the shorts food, they should have set the floor as absolute and made it clear they had the cash and would simply pay off if the floor wasn't met and give clear reassurance that in any case they would not be desperate for cash later needing to do a secondary... or something along the lines of, we are confident we have the cash to last us through X quarters even after paying off all notes not exchanged at the floor price. The way I read the document is the HIGHER a of the two equations. We know the VWAP for the 28th and that part of the equation is about $4.60. The VWAP on the 10 day equation is yet to be determined so AF statement about it being a Death Spiral Preferred is an outright lie. The floor was set by the $4.60. Remember convertibles usually have a higher than current stock price. Our original Convertible was priced at $6.80 and that stock was at $5.55. The difference is that MNKD lent the 9 millions shares on that convert that they will be taking back when this current convert matures. |
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Post by mannmade on Jul 31, 2015 14:16:38 GMT -5
Regardless of how this is resolved, I believe it will be resolved (fairly adequately) by 08.15 one way or the other and that will be a positive step n the right direction... As it will be one less issue in front of us. And on we march...
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Post by EveningOfTheDay on Jul 31, 2015 14:25:22 GMT -5
Consider that they have the ability to do so, but not have done so in the first two days, since changes in the floor would have to be announced, I believe, as per the agreement. However, I agree with you that the deal does not inspire lots of confidence. I honestly do not think cash will be a problem if it comes down to it, but that does not mean MNKD does not have a preference at to how and when cash is spend. Agree with our cold blooded green one. I originally thought this was a reasonable deal until the shorts called Mannkinds bluff and lowered the price just enough so as to force Mannkind to react (which they haven't done so far). Now the shorts have lowered the price below the conversion rate management looks like they are negotiating from a weak position (and maybe they are). This could have been presented very differently so as to not feed the shorts. This deal was almost an open invitation to lower the price just enough so as to not get the deal done. If management wasn't expecting this to happen I don't get it. Had they stated like our lizard friend that conversion was their preferred mean of payment but they were financially ok for 1 year even without conversion we might be in a different place right now? I'm by far an expert on these deals but they should have seen this coming no? They obviously know what the number are (I say this in the broadest sense of the term) and presumably they were negotiating with the note holders, or at least some of them, so yes, you present a very valid question. Why did not see this coming? But if their position is increasingly desperate, why giving it away so easily? I could be wrong, but I seem to remember that SI started increasing exponentially when the original note deal was put in place. There might be reasons for them to believe that once the notes are out of the way and BOA shares have been returned, the trend might reverse. In the short term, obviously, there could be more pain coming, but I still think they are slowly trying to steer the boat to calmer waters, even if they are still clearly sailing against the wind. |
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Tinkerbell
Researcher
Watcher of the Skies
Posts: 143
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Post by Tinkerbell on Jul 31, 2015 15:26:43 GMT -5
I completely agree that MNKD should do all it can to preserve its cash. There is no question that they will need to expand manufacturing overseas and that takes a lot of money. SNY alone won't pay for it.
Regardless of the outcome of the note, Afrezza is not going anywhere except to diabetics around the world. New drug sales typically increase year on year but it's never fast enough for shorts (and even for some longs I'm afraid). They have very unrealistic expectations given the long road MNKD has travelled to approval (irresptive of the reasons). Shorts echo each others 'chants' that sales should have been much, much higher by now and they've now grabbed onto the 'death spiral' chant. But which new drug sales do shorts compare Afrezza to? How does a company actually die? I've been in drug development for most of my professional life and frankly put, unless a new drug literally 'cures' cancer overnight, it will always take time (5 years minimum) for a novel drug/delivery system to START to take hold. Change practice? You're looking at 15-20 years. When you consider that injectibile insulin has been the standard of care for decades, how long can one expect a huge sea change to occur? One decade? Two? APPL went public in December 1980 - 35 years ago. Yeah - that sounds about right.
Kudos to Matt and to MNKD management for looking to work out a way to preserve their cash as they look to the next 3-4 crucial years of growth. In my view, there is no explanation warranted on this strategy and yes, investors can take their money elsewhere but they should think twice. Why? I have never, ever seen a diabetic drug impact post prandial glucose the way Afrezza does WITHOUT the use of intravenous. Never. So - I know where I'm keeping my MNKD investment for the foreseable future and likely beyond. With regards to the note and the death spiral chants? Who'll even remember them this time next year. I won't.
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