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Post by bretzyboy on Jul 29, 2015 18:03:11 GMT -5
Selling $4 strike puts for 8/21 would yield 6.25% or something close to that by the time the dust settles on today's news. Just tossing that out as as an alternative - helps to reduce cost basis and kind of fits Rob Sachers buy on the dip strategy.
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Post by afrizzle on Jul 29, 2015 18:48:19 GMT -5
Meh
I picked up 10k additional shares and am sitting on a bit more cash in case we dip significantly lower.
I've got a full position against my plan but these people rices won't last in my opinion
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Post by babaoriley on Jul 30, 2015 1:25:55 GMT -5
Here's my take on the stock for notes exchange, and I'm starting with a direct quote from MNKD's website for reference:
"With respect to the stock-for-notes exchanges, the transactions are generally scheduled to be priced over a 10 trading day period spanning from July 29, 2015 to and including August 11, 2015. The number of shares to be issued with respect to each exchange date will equal approximately 1/10th of the total principal amount of the 2015 notes to be exchanged and accrued and unpaid interest thereon, divided by the exchange price for such date. 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."
My thoughts follow:
I think that in dudley's last iteration, he has it just about right. However, I do not think VWAP is too tough to figure within a penny or two, just by a look at a chart. I would put it right around $4.87 on 7/28 and $4.43 for 7/29. So, I think you can make some assumptions, and if you get an answer that’s close, well, you can't be sure, but 7/29 seems easy - the holders were not compelled to convert, as 7/29’s VWAP of about $4.43 is well below the floor price (not the exchange price, which as we know is discounted by 4.25% from the floor price) of about $4.59 or $4.60, which floor price was set by multiplying the VWAP for 7/28 of 4.86 (again, an estimate) times 94.50%.
Now, notwithstanding that they were not compelled to convert, some holders may have converted 7/29, because their conversion price (another term for exchange price) on 7/29 would have been about $4.39 (7/28 floor price of $4.86 times 95.75%); I don’t know that we’ll ever find out how many, if any, converted on 7/29 or any other day for that matter.
Unless MannKind changes the initial floor price now set at about $4.60, it will remain there through the ten day period. So for whichever of those 10 days the VWAP is under the floor price, the holders will not be compelled to convert, and only those who elect to convert will have converted.
What is not clear to me, is if, say two days go by and there are hardly any conversions (say on 7/29 and 7/30 the VWAP remains below the floor price), but then on 7/31 the VWAP is above the floor price, does around 30% get converted or just 10%? And if it is just 10%, then what happens when the tenth trading day comes to an end and all conversions are not done? Does the time get extended? Does MNKD then have the right (mnkd’s option) to pay off the debt holders in cash, does MNKD have an obligation (no option, mnkd must) to pay off the debt holders in cash? Do the holders have a right to refuse payment in cash and wait to take their chances with the conversion?
Then, you must think of the following – if mnkd really does not want to pay those debt holders in cash (which apparently, they do not), and the price is such that the WVAP day to day is lower than the floor price and debt is not being converted, might not mnkd then lower the floor price, as is their right, to get the job done?
Finally, with respect to the 9 million shares which BofA borrowed, my understanding is that transaction was related to the $100 debenture, all happening in 2010. The 9 million shares were to be shorted at $5.55, as a hedge for those who participated in the debenture. Thus, if about 27% of the $100 million is being rolled to 2018, I would think that 73% of the 9 million shares, or 6,570,000 shares, would have to be returned, with the remaining 2,430,000 shares remaining the obligation of BofA to return upon the retirement of the debenture, now to occur in August of 2018.
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Post by benh on Jul 30, 2015 3:21:52 GMT -5
Some very good posts on this subject; dudley's above is especially good, thanks dudley! Yes, there was always going to be dilution, but Matt and others were hopeful that the exchange price for the debt would have been at least around $6, instead of where it is. Also, there's that provision in the news release that allows MNKD to change the floor price on a day to day basis over the ten day period. So, if conversion isn't happening because the price is too low, it seems MNKD can either pay off the debt with cash or allow for a lower floor price. I think I have a bit less of a problem with Matt's recent claims. To me, the interesting thing will be whether this stock can be (will be) manipulated above or below $4.39, which was my estimate of the floor price in my earlier, still sleepy-headed post. I believe the next ten trading days will be trench warfare - keep low and keep that helmet fastened tightly. Baba, I've done a quick calc elsewhere and arrived at an exchange price floor of $4.41. This price is critical, because the way I read the PR, the note holders are obligated to convert one-tenth of their shares each day so long as the VWAP that day is not below the exchange price floor. Give today's pricing/volume, it would appear that 10% of those shares are now converted, probably at a price of $4.41 +/- (which is greater than 95.75% of the assumed VWAP today of approx $4.46). I thought some conversions hit the tape at 11.30am and 2.30pm (on the 29th). |
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Post by dudley on Jul 30, 2015 10:27:22 GMT -5
Here's my take on the stock for notes exchange, and I'm starting with a direct quote from MNKD's website for reference: "With respect to the stock-for-notes exchanges, the transactions are generally scheduled to be priced over a 10 trading day period spanning from July 29, 2015 to and including August 11, 2015. The number of shares to be issued with respect to each exchange date will equal approximately 1/10th of the total principal amount of the 2015 notes to be exchanged and accrued and unpaid interest thereon, divided by the exchange price for such date. 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." My thoughts follow: I think that in dudley's last iteration, he has it just about right. However, I do not think VWAP is too tough to figure within a penny or two, just by a look at a chart. I would put it right around $4.87 on 7/28 and $4.43 for 7/29. So, I think you can make some assumptions, and if you get an answer that’s close, well, you can't be sure, but 7/29 seems easy - the holders were not compelled to convert, as 7/29’s VWAP of about $4.43 is well below the floor price (not the exchange price, which as we know is discounted by 4.25% from the floor price) of about $4.59 or $4.60, which floor price was set by multiplying the VWAP for 7/28 of 4.86 (again, an estimate) times 94.50%. Now, notwithstanding that they were not compelled to convert, some holders may have converted 7/29, because their conversion price (another term for exchange price) on 7/29 would have been about $4.39 (7/28 floor price of $4.86 times 95.75%); I don’t know that we’ll ever find out how many, if any, converted on 7/29 or any other day for that matter. Unless MannKind changes the initial floor price now set at about $4.60, it will remain there through the ten day period. So for whichever of those 10 days the VWAP is under the floor price, the holders will not be compelled to convert, and only those who elect to convert will have converted. What is not clear to me, is if, say two days go by and there are hardly any conversions (say on 7/29 and 7/30 the VWAP remains below the floor price), but then on 7/31 the VWAP is above the floor price, does around 30% get converted or just 10%? And if it is just 10%, then what happens when the tenth trading day comes to an end and all conversions are not done? Does the time get extended? Does MNKD then have the right (mnkd’s option) to pay off the debt holders in cash, does MNKD have an obligation (no option, mnkd must) to pay off the debt holders in cash? Do the holders have a right to refuse payment in cash and wait to take their chances with the conversion? Then, you must think of the following – if mnkd really does not want to pay those debt holders in cash (which apparently, they do not), and the price is such that the WVAP day to day is lower than the floor price and debt is not being converted, might not mnkd then lower the floor price, as is their right, to get the job done? Finally, with respect to the 9 million shares which BofA borrowed, my understanding is that transaction was related to the $100 debenture, all happening in 2010. The 9 million shares were to be shorted at $5.55, as a hedge for those who participated in the debenture. Thus, if about 27% of the $100 million is being rolled to 2018, I would think that 73% of the 9 million shares, or 6,570,000 shares, would have to be returned, with the remaining 2,430,000 shares remaining the obligation of BofA to return upon the retirement of the debenture, now to occur in August of 2018. Baba, I think it is safe to say this is a murky situation all around with none of the pieces clearly evident. Nothing posted on the website today about floor price adjustment so today's VWAP will most definitely be below the floor. So now we are 20% done with 2 of the 10 trading days below the floor and no way to know if any shares have actually converted. No way to know what is happening with the 9 million shares returning from BOA. My personal speculation is that Al will step up and fund whatever remains of any unconverted notes with another loan - but that's just a feeling I have. It would have been nice if the 8-K specified what happened if noteholders elected NOT to convert on any given day but for now it is nothing but guesswork. Matt will have some explaining to do for sure - in general I like Matt but this particular issue is very poorly communicated . I long for the day when clarity rules over guesswork - hopefully this time next year the guesswork will be what to do with MNKD shares that have tripled in value. Meanwhile back to waiting and watching. Still in for the long haul and not worried. |
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Post by tbone on Jul 30, 2015 10:40:25 GMT -5
I agree. I feel none would have been converted yesterday nor will be today. The only thing that will help any get converted in next 8 days is a rally or reprice of floor. Even after the 'end of the world' reaction we could still be left with no resolution to the majority of the debt. The silver lining? When things appear this bad you are usually close to the end of the ebbing and the return to the flowing.  |
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Post by kc on Jul 30, 2015 11:18:23 GMT -5
I posted this yesterday on YMB and you have to think about why MNKD is so silent. I am optimistically hoping that Management (Matt, Haken, and others) are playing a great game of chess and have been moving the pieces on the board in a methodical manner for Checkmate on the shorts.
Its all about the TIMING. Matt worked hard in the spring with 4 different events presenting to Analyst who were being shopped for this deal. He was clear in his comments at the following meetings.
05/13/15
Bank of America Merrill Lynch 2015 Healthcare Conference
if you remember how the various conferences he went to this spring, the B of A one he was very clear almost to the point of telegraphing to them that their Shorted shares were going to be history. Matt had a swagger that we hall had not seen before. Especially the week before at the 1st QTR call.
Now look at what has been announced today?
06/24/15
JMP Securities Life Sciences Conference
06/10/15
Goldman Sachs 36th Annual Global Healthcare Conference *** We have not heard a peep out of Jay Olsen since this event? Why? was GS in the placement of the new debt? You bet they were and could not make any disclosure. Matt evidently Kept his enemy very close to him and Olsen couldn't even respond. No questions other than some off line which we don't know about.
06/03/15
Jefferies 2015 Global Healthcare Conference
So Matt made the circuit and sold the package and in doing so made it a private placement to get rid of the B of A debt and their shorted shares. He did a great job in my opinion.
Announcement of the deal after market opened yesterday to prevent a harder beating by the shorts who don't know what Sanofi will say in their 2nd Quarter about sales. Notice how Adam F. Had to strike very quickly to telegraph to his Shorty friends to be careful and he dissected his message in a cryptic warning as this announcement today might have more going on than anybody knows. We don't know what sales have been or what MannKind will announce in a couple of weeks during their quarterly call. There may be a bit of Smoke and mirrors being played out by MannKind. I hope the best is yet to come for all of us who are long in MannKind. L |
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Post by dreamboatcruise on Jul 30, 2015 11:32:35 GMT -5
I am optimistically hoping that Management (Matt, Haken, and others) are playing a great game of chess and have been moving the pieces on the board in a methodical manner for Checkmate on the shorts.
I think I need to start a poll... what game is MNKD playing? Chess Checkers Musical Chairs Hide and Seek Playing doctor with SNY  Sorry, I have to keep myself amused. |
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Post by tbone on Jul 30, 2015 11:44:15 GMT -5
Pin the tail on the shareholder.
Wait, Al is largest so that can't be it.
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Post by monger on Jul 30, 2015 13:44:49 GMT -5
Chess Checkers Musical Chairs Hide and Seek Playing doctor with SNY Sorry, I have to keep myself amused. Great (and funny) question! Given the complexity of the refi and the many nuances and unknowns in what should be a pretty straightforward situation, I have two theories: 1. They're playing an incredibly sophisticated game similar to D Day, and their plan is to Pin the Tail on the Shorts and annihilate them through misdirection and surprise, or, 2. This game has gotten away from them, become totally muddled, and it only looks like they're being fiendishly clever when they're just writing poorly constructed and thought out agreements. I'm voting for #1, but ya never know. What really bothers me about this stock--and I appreciated Nate's Notes saying he hadn't seen anything like this in 26 years--is this well known quote from Rounders: "Listen, here’s the thing. If you can’t spot the sucker in your first half hour at the table, then you are the sucker.” Either this is a stock that is being played masterfully, as many claim, and we're all the suckers here (in the short term, not the long term of course), or we have a bunch of big and small players going ape in this game and destabilizing things, sometimes to everyone's surprise, i.e., no one's really in control behind the curtain, they just think they are sometimes. I certainly have no idea, but finally decided to stop worrying about the day to day because I'm not smart enough, or lucky enough, to play the ups and downs. I keep thinking the downs are about over, and I don't want to be out of it. Then we have another dip, and I think what a great buying opportunity that is. One day it will stop dipping (violently at least), but I have no idea when that will be, so I've given up and just remain solidly long, and long term focused. That's really all I can do here. And maybe enjoy a few comments. |
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Post by _neil on Jul 30, 2015 13:57:33 GMT -5
In my unsophisticated opinion, this is the best deal Al & co could get. All the complexity in every thing they do shows they are scrambling to make it the next mile. Given the scrip count and the sloths-on-ambien pace of MNKD/SNY rollout, there simply is zero leverage in Mannkind's hands. I have readjusted my projections downwards a few times with MNKD and I'll do so again.
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Post by dreamboatcruise on Jul 30, 2015 14:05:07 GMT -5
monger... not that I think it has to be one or the other, but I highly doubt #1 given what we know about Al. I don't think he is someone to pay attention to the shorts at this point, much less condone elaborate misdirections and traps. Whether it is a strength or a weakness, I think Al is focused on long term and not what the traders are doing. As for your #2 option, I think it quite a stretch to say it " looks like they're being fiendishly clever". Even people hoping for that would have to do a lot of squinting (through a pair of tinted glasses) to actually see that.
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Post by kbrion77 on Jul 30, 2015 14:18:35 GMT -5
I'm not under the belief there is a big setup for the shorts and honestly I don't want a management team spending their time playing chess with shorts but rather build this company to where we all think it can be. I'm in for the long haul and am hoping this is the trade of my lifetime 15 years from now. But I am infatuated with the hedge funds strategy past and present. I truly believe they have an edge on the overall strategy that Sanofi and Mannkind are currently executing and have known since the agreement. I would love 5 years from now to get their side of the story and hear how much money they made shorting and then going long.
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Post by monger on Jul 30, 2015 20:09:06 GMT -5
monger... not that I think it has to be one or the other, but I highly doubt #1 given what we know about Al. I don't think he is someone to pay attention to the shorts at this point, much less condone elaborate misdirections and traps. Whether it is a strength or a weakness, I think Al is focused on long term and not what the traders are doing. As for your #2 option, I think it quite a stretch to say it " looks like they're being fiendishly clever". Even people hoping for that would have to do a lot of squinting (through a pair of tinted glasses) to actually see that. Well, I guess if we have to be serious now, then I agree they're not spending a bunch of time setting traps. They have plenty to do just running the company, I would think. And I hope the whole financing process hasn't gotten away from them, either. It just seems to me that when you examine almost any facet of this stock, starting with the retirement of the $100 M, you find an abnormal amount of complexity. But perhaps I just haven't seen enough deals like this. What I find interesting is that when some bright people on this board start taking it apart, there are more assumptions than facts. Just had to make fun of what this complexity might mean. Hey, YOU started this game! :-) |
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Post by mnholdem on Jul 30, 2015 21:40:51 GMT -5
I recently used the game of chess as an analogy that I applied to Sanofi being careful not to telegraph their marketing strategy to their competitors. If there is a game being played in respect to MNKD share prices, it would be an altogether separate game that's being played. Sanofi would be part of this 2nd game ONLY if they plan to acquire MNKD shares at a low price. However, if Sanofi used prior knowledge of MannKind's convertible debt buy down and noteholder agreements to purchase shares on the cheap, it could subject Sanofi to a charge of violating insider trading rules.
Therefore, if a game is afoot related to trapping shorts, or triggering a short squeeze, Sanofi likely would not be a part of it.
Ahem...
The truth is that, if Sanofi's plan is to buy a large block of MNKD shares on the cheap to become MannKind's second-largest shareholder, they would not need Matt to conjure up a less-than-spectacular refinancing deal to send pps down. They'd simply have to see to it that sales don't meet expectation for a short period of time. If Sanofi's Board of Directors has authorized buying a stake in MannKind, you can expect to see MNKD share prices explode (as soon as SNY has purchased its shares and makes the announcement). Otherwise, the reality is that they really couldn't care less about MNKD share price, unless it eventually affects their image and makes them look like a company that startups should never go to for global distribution.
500 scripts per week? Sanofi could beat that with their eyes closed. So why aren't they selling Afrezza? Any number of reasons could be the answer and, as I said before, Sanofi is not about to reveal their strategy to their competitors. It sucks that, as a shareholder, I know that I am an ally and not a competitor - in fact, I feel that as a minority owner, I should still have the right to some details - but I will reluctantly accept the need for silence. Just don't keep me in the dark forever...
Nite, everyone! 
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