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Post by yossarian on Jul 29, 2015 9:44:15 GMT -5
Seems debt holders have given MANNKIND a HUGE vote of confidence. They obviously do not believe MNKD is in danger of going under. They extended the notes at the same interest rate NOT an increased interest rate. This would seem to indicate they do not think the risk of holding debt has increased. They want shares of MNKD. This does not indicate a company that debt holders think is on the brink of extinction. All and all, this seems very very BULLISH.
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Post by kball on Jul 29, 2015 9:45:15 GMT -5
Frustration is to be expected, but you can't really ever say Al hoodwinked shareholders when he's the largest shareholder.
I've never heard of a Billionaire trying to hoodwink themselvesTrump maybe. |
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Post by novafett on Jul 29, 2015 9:47:34 GMT -5
And to be expected AF comes out with his garbage spin on the latest news.
MannKind Relies on 'Death Spiral' Financing to Help Settle Looming Debt
By Adam Feuerstein Follow | 07/29/15 - 10:33 AM EDT
Exclusive FREE Report: Jim Cramer's Best Stocks for 2015.
VALENCIA, Calif. (TheStreet) -- MannKind (MNKD) is using a mix of discounted stock and more debt to settle a $100 million convertible loan coming due in two weeks.
The stock-for-debt exchange, which covers a bit more than half of MannKind's obligation, is the worst part of the agreements announced Wednesday because the exchange price of the stock is determined by the price of Mannkind shares over the next 10 trading days.
This is the classic definition of a death-spiral convert, a form of distressed financing which forces companies to hand over more shares when the stock price falls.
MannKind isn't at risk of shutting down imminently because of the death-spiral convert, but the company was forced into a weakened negotiating position with its debt holders because Afrezza, an inhaled form of insulin for diabetes, is selling poorly and its long-term financial health is uncertain at best.
Money is very easy to come by in the red-hot healthcare sector today, so MannKind's inability to settle its $100 million debt on more favorable terms is a sign that investors have low confidence in Afrezza and the company's management team.
If Afrezza continues to be a commercial disappointment, MannKind will face a cash shortfall in the next year because of other, significant spending obligations.
Sanofi (SNY - Get Report), which sells Afrezza under a license from MannKind, reports second-quarter earnings on Thursday.
MannKind shares are down 6% to $4.48 in Wednesday trading following the announcement of the new financing agreements.
Under those agreements, MannKind is issuing new convertible debt due in 2018 to settle $28 million of the existing $100 million convertible debt. Terms of the new debt are similar to the old debt.
For $57 million of the existing debt, MannKind has agreed to issue company stock. As mentioned above, the amount of MannKind stock to be issued will be determined by price of the stock over the next 10 trading days, through Aug. 11.
MannKind did not disclose how it plans to settle the remaining $15 million owed to holders of the $100 million convertible debt, but it's likely the company will use existing cash.
"This seems like the best MannKind could do," says a healthcare portfolio manager who specializes in convertible debt financings but does not own any of the MannKind debt. His firm's compliance rules don't allow him to be quoted by name. "MannKind doesn't have the cash [to settle] so this is the best deal for them -- roll some bonds and pay back with worthless equity."
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.
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Post by kball on Jul 29, 2015 9:50:14 GMT -5
Sure would like to get Fugacity's take on this.
Where he been?
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Post by jefferson on Jul 29, 2015 9:52:28 GMT -5
I just bought more. Have a great day!
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Post by tayl5 on Jul 29, 2015 9:59:16 GMT -5
The point is not how " minimal". The point is Matt flat out destroyed whatever credibility he has left. He was asked on multiple occasions and confidently stated the multiple options at his disposal while reiterating no dilution. Looked me right in the eye at the shareholder meeting. How can we believe anything that comes out of their mouths? So happy I figured out trading this is more profitable than holding it. From Matthew Pfeffer's comments at the Goldman Sachs Global Healthcare Conference: "...one thing I can virtually guarantee is that we we won't do a marketed secondary offering. That doesn't mean there might not be some equity components somewhere down the road. It's not going to be in a way that those shares would be readily made available to someone who is a short of stock..." The deal Mannkind did is consistent with those comments: it's not a marketed secondary offering and the shares are restricted so they can't be shorted. The details matter. You can think of it as a dilution from the point of view that each share gets part of the company's negative EPS, but until the company is paying a fat dividend it really doesn't matter. |
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Post by novafett on Jul 29, 2015 10:00:52 GMT -5
I just bought more. Have a great day! As did i .. i haven't purchased any since back in March but now seemed like a great time. If for some reason the SNY results bring it down further on Thurs I'll buy in again.  Oh and i lowered my cost basis!! Good news indeed. |
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Post by savzak on Jul 29, 2015 10:01:47 GMT -5
The point is not how " minimal". The point is Matt flat out destroyed whatever credibility he has left. He was asked on multiple occasions and confidently stated the multiple options at his disposal while reiterating no dilution. Looked me right in the eye at the shareholder meeting. How can we believe anything that comes out of their mouths? So happy I figured out trading this is more profitable than holding it. From Matthew Pfeffer's comments at the Goldman Sachs Global Healthcare Conference: "...one thing I can virtually guarantee is that we we won't do a marketed secondary offering. That doesn't mean there might not be some equity components somewhere down the road. It's not going to be in a way that those shares would be readily made available to someone who is a short of stock..." The deal Mannkind did is consistent with those comments: it's not a marketed secondary offering and the shares are restricted so they can't be shorted. The details matter. You can think of it as a dilution from the point of view that each share gets part of the company's negative EPS, but until the company is paying a fat dividend it really doesn't matter. Thank you for that perspective. |
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bob
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Post by bob on Jul 29, 2015 10:01:51 GMT -5
So if I understand today's announcement, my interpretation is, if the stock price was trading above $6.80, the company would have issued 9,000,000 shares as disclosed in all SEC filings since 2010, I think. That is not news. Today's announcement means the $56.9 million of the notes will convert at some price to be determined by the price per share performance over the next 10 days. So pick a number, say $4.50/share. If that is the weighted average share price the company would issue 12.6 million shares. While that is more than the 9 million, I do not view this as majorly significant. Granted the company still has $27 million in debt but it is not a bad option. The share price was over $5.00/share most of June and July. Should more positive news drive the stock higher, the 3.6 million share differential will reduce (I believe a floor price for conversion has been established). 3.6 million shares on 416 million outstanding, less than 1% of the shares outstanding. To me that is minimally dilutive as Matt suggested in one of his Q&A's at one of the June investor conferences.
In the end, what will drive the share price higher is a growing base of enthusiastic customers and more doctor acceptance for proscribing Afrezza for Type 1 and Type 2 patients.
Long time viewer of the site, first time post.
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Post by hankscorpio7 on Jul 29, 2015 10:08:24 GMT -5
All have to do is keep pps above $10 until Aug. 11- only 5.5m dilution. If shorts keep stock at $2 for more then 10 days, 23m. Something to fight over. So AF was correct about debt and dilution? Say it ain't so Matt, say it ain't so... There is a floor of around $4.85 on the conversion price. Please read the press release more carefully. My apologies. I read MNKD "may" adjust floor price as "will" adjust. Hey- AF made same mistake in his rant. Great minds think alike! Would hope MNKD would not need to adjust floor but... |
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Post by babaoriley on Jul 29, 2015 10:13:55 GMT -5
Seems clear the last half of yesterday trading was a concerted effort to bring the volume weighted average price down, so as to lower the floor rate of conversion. So it around 9.5% or so lower than the volume weighted average price for yesterday. Not sure what that price is, but my guess is around $4.85, so that puts the floor price at around $4.39. The way this stock is manipulated, I have to think that price is significant amongst those who trade over the next couple of weeks. So we could have up to close to 13,000,000 new shares issued as the result of this deal.
If it's accurate that the 9,000,000 BofA shares are returned (and assuming they were previously counted in outstanding shares), then, worst case, it's about a 4,000,000 share dilution, 1%. Not much at all, but I still don't like the way Matt previously talked about it, and of course, left our chin totally exposed to AF and others (this is going to have margin call ramifications). I'm also assuming the remainder of the debt gets taken care of without more shares being involved.
Disclaimer - the above is on a quick reading and understanding that it's way too early for me to think clearly - no coffee yet.
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Post by kc on Jul 29, 2015 10:15:30 GMT -5
MNKD has given itself 3 years to resolve this issue once and for all. At that time they will have more than enough cash assets to eliminate this debt. Why are you guys unhappy ? They bought time to resolve this at a future point of being flush with cash. It's good news indeed. Exactly how I saw it everything is status quo and they kicked the can down the road to a future date when sales are going well. 5.75% is not a great rate but I think that the B of A was about 10.50% so this might set the rate on that note lower too. which would be good. |
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Post by tmann on Jul 29, 2015 10:19:18 GMT -5
All have to do is keep pps above $10 until Aug. 11- only 5.5m dilution. If shorts keep stock at $2 for more then 10 days, 23m. Something to fight over. So AF was correct about debt and dilution? Say it ain't so Matt, say it ain't so... There is a "floor price", and it is probably more than $2. The big question is what is happening with the 9 million shares held as collateral for the old loan? Is MNKD essentially rolling over the loan on similar terms, and paying off about $15.4 million to those who wouldn't agree to the new terms? Seems to me getting the 9 M shares back is a significant. Less to borrow for short interest. |
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Post by joeypotsandpans on Jul 29, 2015 10:19:44 GMT -5
There is a floor of around $4.85 on the conversion price. Please read the press release more carefully. My apologies. I read MNKD "may" adjust floor price as "will" adjust. Hey- AF made same mistake in his rant. Great minds think alike! Would hope MNKD would not need to adjust floor but... The problem AF has is he puts this stuff out there, just like there would be no Adcom recommendation to approve, etc. etc., so now he has to deal with how he cleans up the feces that just spewed from his pen after the next 10-11 days rolls by. Seriously, does anyone think Matt is going in front of the wolves without knowing he can address those questions...remember how he looked a week before the BofA conference, and then it seemed like a totally different CFO at the BofA conference? |
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Post by compound26 on Jul 29, 2015 10:21:56 GMT -5
All have to do is keep pps above $10 until Aug. 11- only 5.5m dilution. If shorts keep stock at $2 for more then 10 days, 23m. Something to fight over. So AF was correct about debt and dilution? Say it ain't so Matt, say it ain't so... There is a floor of around $4.85 on the conversion price. Please read the press release more carefully. greg, where did you get the $4.85 number? Is that equal to 94.5% of the daily VWAP on July 28, 2015 as referred to in Mannkind's press release? The exchange price for each such date will reflect the greater of 95.75% of the volume-weighted average price (VWAP) of MannKind's common stock for such date and 95.75% of a floor price, which floor price will initially be 94.5% of the daily VWAP on July 28, 2015, but may be adjusted by MannKind for any trading day by providing notice to the holders prior to 9:00 a.m. Eastern Time on such day. The holders will not be obligated to complete any stock-for-notes exchange for any date on which the daily VWAP is below the floor price then in effect. In the event MannKind modifies the initial floor price for any trading day during the exchange period, MannKind will promptly publish the modified floor price on the Investor Relations page of its corporate website (http://investors.mannkindcorp.com/index.cfm). - See more at: investors.mannkindcorp.com/releasedetail.cfm?ReleaseID=924457#sthash.wxZh8UA7.dpuf |
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Oh and i lowered my cost basis!! Good news indeed.
