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Post by dudley on Aug 4, 2015 10:40:55 GMT -5
IMO... (Like It'd be anything other) I think they're ALL converting.... This is a prearranged deal, which means this is what they wanted.... And MNKD did NOT set the floor price. MNKD set the equation that got TO the floor price, but "they" walked the stock down to where "they" wanted the floor price to be set... SO, I believe "they" are converting now, where "they" wanted to. Please explain WHY I would convert my note for shares at a conversion price of .9575 of the floor (floor price is .945 of the approximate VWAP of 4.82 on 7/28. That's $4.55) THEN the exchange price is the GREATER of that number x .9575 - or $4.36 OR .9575 of the daily VWAP. The floor has been ABOVE .9575 of the VWAP every single day thus the floor is the exchange price. I as a noteholder can buy the shares on the open market cheaper than the exchange price. Why would I convert when I can buy the shares cheaper and then get my original cash back on 8/15? I get more shares at a cheaper price plus my cash back - no way am I going to convert. Yes, this share price is an orchestrated event - no question. However it is extremely likely NOBODY is converting. In the end no huge thing either way for reasons posted earlier. All of us are ultimately just guessing here - Matt will have a busy time getting all this tied up and explained.
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Post by longstocking on Aug 4, 2015 10:43:56 GMT -5
IMO... (Like It'd be anything other) I think they're ALL converting.... This is a prearranged deal, which means this is what they wanted.... And MNKD did NOT set the floor price. MNKD set the equation that got TO the floor price, but "they" walked the stock down to where "they" wanted the floor price to be set... SO, I believe "they" are converting now, where "they" wanted to. Please explain WHY I would convert my note for shares at a conversion price of .9575 of the floor (floor price is .945 of the approximate VWAP of 4.82 on 7/28. That's $4.55) THEN the exchange price is the GREATER of that number x .9575 - or $4.36 OR .9575 of the daily VWAP. The floor has been ABOVE .9575 of the VWAP every single day thus the floor is the exchange price. I as a noteholder can buy the shares on the open market cheaper than the exchange price. Why would I convert when I can buy the shares cheaper and then get my original cash back on 8/15? I get more shares at a cheaper price plus my cash back - no way am I going to convert. Yes, this share price is an orchestrated event - no question. However it is extremely likely NOBODY is converting. In the end no huge thing either way for reasons posted earlier. All of us are ultimately just guessing here - Matt will have a busy time getting all this tied up and explained. At least dilution will be minimized.
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Post by mnholdem on Aug 4, 2015 11:08:35 GMT -5
IMO... This is a prearranged deal, which means this is what they wanted.... And MNKD did NOT set the floor price. MNKD set the equation that got TO the floor price, but "they" walked the stock down to where "they" wanted the floor price to be set... SO, I believe "they" are converting now, where "they" wanted to. The question is who is converting? Makes me wonder if the privately negotiated with was ? Who? Personally I think and hope its prelude to a BUY In but than again I am living on fantasy island but can't seem to find Mr. Roarke or Tatto. I do keep running into the evil AF and JC.
The MannKind PR stated that of the $100 million debt:
$84.6 in Notes would be exchanged: - $27.7 in 2018 Notes for 2015 Notes
- $56.9 in MNKD Stock for 2015 Notes, paid over 10-day period
$15.4 (balance of $100M) has been paid
Let me take your "fantasy island" suggestion out for a spin:
Let's assume that the number of note holders is much fewer than most realize: - MannKind convinces its bullish note holders to swap $27.7 million in a Note-for-Note deal, extending the same terms another 3 years;
- MannKind pays off $15.4 Million to the remaining few note holders, except for one.
- Sanofi is the final note holder of $56.9 Million of convertible debt, which it will convert to shares over the next 10 days at the pre-determined floor price. In addition, Sanofi will buy shares in the open market during those 10 days.
MannKind/Sanofi have said absolutely nothing about this, so they cannot be accused of manipulation, but they have been fully aware of what limited sales and little news will mean for a stock that is approaching a 50% short interest.
When would Sanofi have to file a Schedule 13D with the SEC?
Here is the info:
Schedule 13D is a long-form beneficial ownership disclosure statement. The triggering event for an initial Schedule 13D is an acquisition that results in a beneficial owner exceeding the 5 percent threshold. An acquisition is not limited to a purchase. The formation of a group may result in an acquisition of the securities of other group members even if no purchase occurred. Likewise, donees, trustees or executors may acquire securities without intending or taking any action to purchase securities.
Upon a triggering acquisition, Rule 13d-1(a) (17 CFR 240.13d-1) requires that the beneficial owner file a Schedule 13D within 10 days after the acquisition. The 10-day period begins on the date of the acquisition (i.e., the trade date rather than the settlement date).
During the 10-day filing window, the beneficial owner is not prohibited from acquiring additional securities of the same class. On the date of filing, the reporting person should disclose the current holdings as of that day (as well as recent acquisitions and dispositions as required by Schedule 13D).
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The trigger, or 5% of MNKD 409M outstanding shares is roughly 20.45 Million shares (slightly more if counting the dilutive effect of notes converting to shares). What if Sanofi holds and is converting that $54M remaining portion of debt via share-to-note conversion (equaling roughly 13 million shares) and also purchases several million more MNKD shares on the open market during that 10-day period?
In other words, Sanofi buys into MannKind Corporation at a bargain. Was some of this, in fact, redacted in the partnership agreement?
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This may all sound crazy, but if Sanofi knows, one, it has a winner with Afrezza and, two, purchasing millions of MNKD at these prices will significantly reduce their cost-average for an eventually buy out? The idea that we're witnessing a buy in is a distinct possibility, albeit a remote one.
Assuming that Sanofi reaches the 5% trigger late in the 10-day period, they'd have another week to acquire open-market shares. If MannKind's 2Q15 earnings call lacks any significant news of Afrezza or pipeline developments, the share price could tank and Sanofi could scoop up millions of shares for another 5-7 days before having to file as a NEW major owner of MNKD.
Remember, we're talking cost-averaging a FUTURE buyout of Afrezza or the company. Still sound crazy? I guess we'll know in another two weeks. Regardless, I am not going to get discouraged over a relatively down-beat earnings report.
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Post by tripoley on Aug 4, 2015 11:11:49 GMT -5
Interesting. So tell me, we know that if Sanofi (or any company) ever acquires 5% of MNKD's outstanding shares, it must be reported to the SEC - is there a similar reporting requirement for noteholders? I find myself wondering what if Sanofi was one of the original noteholders and they own, say, several tens of $million of the convertible notes. Am I correct that they wouldn't need to file a 13g (5%-20%) or 13d (+20%) with the SEC until 5 days after their notes are converted into shares, plus any additional shares they buy off the market (at a great price, I might add)? The shares are also unregistered I think. (1). Wth does that mean? (2). Do you have to report unregistered shares?
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Post by notamnkdmillionaire on Aug 4, 2015 11:14:02 GMT -5
The question is who is converting? Makes me wonder if the privately negotiated with was ? Who? Personally I think and hope its prelude to a BUY In but than again I am living on fantasy island but can't seem to find Mr. Roarke or Tatto. I do keep running into the evil AF and JC.
The MannKind PR stated that of the $100 million debt:
$84.6 in Notes would be exchanged: - $27.7 in 2018 Notes for 2015 Notes
- $56.9 in MNKD Stock for 2015 Notes, paid over 10-day period
$15.4 (balance of $100M) has been paid
Let me take your "fantasy island" suggestion out for a spin:
Let's assume that the number of note holders is much fewer than most realize: - MannKind convinces its bullish note holders to swap $27.7 million in a Note-for-Note deal, extending the same terms another 3 years;
- MannKind pays off $15.4 Million to the remaining few note holders, except for one.
- Sanofi is the final note holder of $56.9 Million of convertible debt, which it will convert to shares over the next 10 days at the pre-determined floor price. In addition, Sanofi will buy shares in the open market at the same time.
When would Sanofi have to file a Schedule 13D with the SEC?
Schedule 13D is a long-form beneficial ownership disclosure statement. The triggering event for an initial Schedule 13D is an acquisition that results in a beneficial owner exceeding the 5 percent threshold. An acquisition is not limited to a purchase. The formation of a group may result in an acquisition of the securities of other group members even if no purchase occurred. Likewise, donees, trustees or executors may acquire securities without intending or taking any action to purchase securities.
Upon a triggering acquisition, Rule 13d-1(a) (17 CFR 240.13d-1) requires that the beneficial owner file a Schedule 13D within 10 days after the acquisition. The 10-day period begins on the date of the acquisition (i.e., the trade date rather than the settlement date).
During the 10-day filing window, the beneficial owner is not prohibited from acquiring additional securities of the same class. On the date of filing, the reporting person should disclose the current holdings as of that day (as well as recent acquisitions and dispositions as required by Schedule 13D).
The trigger, or 5% of MNKD 409M outstanding shares is roughly 20.45 Million shares (slightly more if counting the dilutive effect of notes converting to shares). What if Sanofi holds and is converting that $54M remaining portion of debt via share-to-note conversion (equaling roughly 13 million shares) and also purchases several million more MNKD shares on the open market during that 10-day period?
In other words, Sanofi buys into MannKind Corporation at a bargain. Was some of this, in fact, redacted in the partnership agreement?
Stay tuned...
my god man! you might be on to something!
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bob
Newbie
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Post by bob on Aug 4, 2015 11:30:07 GMT -5
Here is a thought and I apologize in advance for any flaws in my speculative thoughts.
For the purposes of demonstration, let’s assume the lender party (a bond fund) has decided they want to be paid back $56.7 million in cash by Mannkind. Being primarily a bond holding fund, they have decided they really do not want to hold the equity of Mannkind, nor be exposed to MNKD’s price gyrations. So their preference is to ultimately get their cash back on 8/15. But in late July, Mannkind’s investment bank calls with an offer.
Mannkind owes the Bond Fund $56.7 million plus interest on 8/15/15. The Bond Fund owes Merrill Lynch the pro rata portion of the 9 million shares (say 56.7%) of MNKD that they shorted when the original convertible debt offering took place, locking in their return and removing any stock risk except the upside. In July, Mannkind’s agent comes to the Bond Fund and says, “If you convert your shares, we will let you convert at a 10% discount (I am using simpler percentages than the formula Mannkind detailed) to the closing price the day before the announcement.”
So now The Fund can short the additional shares (at $4.85/sh +) they will ultimately be paid for converting, plus they can lock in a return of the difference between $4.85/share and the $4.60/share floor they will be receiving from Mannkind with little to no market or company risk. The only risk is the stock trades above the price they shorted the stock. So you never end up holding the shares or having to worry yourself with MNKD’s stock price. Sure you could play the market betting the price of MNKD will stay below $4.60/sh, but that entails market and company specific risk that The Bond Fund does not want to subject its investors to, so it takes the sure thing. They short a little more MNKD (at $4.85+), and then lock in their conversion price at $4.60/sh (or possibly lower) in 10 days to pay back the borrowed shares, per their agreement with Mannkind and Merrill Lynch. A 10% discount over 10 days is annualized to a very high return number. Which is of importance to bond funds in this low rate environment.
Obviously, there are innumerable securities laws, rules and SEC regulations that Mannkind would have to consider in making this offering. And perhaps those laws and rules may have forced more complexity into the transaction than ordinarily required. The company was also probably dealing with multiple debt holders versus the one in this example. But it may make sense for the $56.7 million debt holder, who would really rather be paid back in cash, to accept this offer so they can make an additional .25/share agreeing to this new deal/offer without subjecting their investors to any more market or company risk over the next 10 trading days.
It will be interesting to see how much of the $56.7 million converts. Also, if the debt holders all opt for cash, the company has $50 million ATM which I believe can still be activated should the company need cash.
Any way just my thoughts on the issue.
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Post by cjc04 on Aug 4, 2015 11:38:50 GMT -5
IMO... (Like It'd be anything other) I think they're ALL converting.... This is a prearranged deal, which means this is what they wanted.... And MNKD did NOT set the floor price. MNKD set the equation that got TO the floor price, but "they" walked the stock down to where "they" wanted the floor price to be set... SO, I believe "they" are converting now, where "they" wanted to. Please explain WHY I would convert my note for shares at a conversion price of .9575 of the floor (floor price is .945 of the approximate VWAP of 4.82 on 7/28. That's $4.55) THEN the exchange price is the GREATER of that number x .9575 - or $4.36 OR .9575 of the daily VWAP. The floor has been ABOVE .9575 of the VWAP every single day thus the floor is the exchange price. I as a noteholder can buy the shares on the open market cheaper than the exchange price. Why would I convert when I can buy the shares cheaper and then get my original cash back on 8/15? I get more shares at a cheaper price plus my cash back - no way am I going to convert. Yes, this share price is an orchestrated event - no question. However it is extremely likely NOBODY is converting. In the end no huge thing either way for reasons posted earlier. All of us are ultimately just guessing here - Matt will have a busy time getting all this tied up and explained. "they" most likely ARE buying at the current, lower than the floor, price as well,,,,, to cover their short position..... Cake and eatin it too.....
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Post by dreamboatcruise on Aug 4, 2015 11:40:23 GMT -5
It doesn't seem like this is a make or break event for MNKD, but this sure is in stark contrast to the message Matt conveyed before of basically "don't worry, be happy... we got this convert deal covered". Now we're going through 10 days of nail biting, picking part an PR looking for clues and guessing as to what might be going on behind the scenes. Uncertainty is not good... and to me it appears this was unnecessary. Such is the life of a MNKD investor.
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Post by tbone on Aug 4, 2015 12:24:22 GMT -5
[/quote]my god man! you might be on to something![/quote] On to something or on something?
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Post by kc on Aug 4, 2015 12:32:19 GMT -5
It doesn't seem like this is a make or break event for MNKD, but this sure is in stark contrast to the message Matt conveyed before of basically "don't worry, be happy... we got this convert deal covered". Now we're going through 10 days of nail biting, picking part an PR looking for clues and guessing as to what might be going on behind the scenes. Uncertainty is not good... and to me it appears this was unnecessary. Such is the life of a MNKD investor. Just remember Matt's confidence at the B & A call one week past the 1st Quarter call. I sure am hoping we are onto what is happening. Al's revenge on the Shorts might just be contained in the 12/15/2015 CT agreement. Wall Street is smart enough to know how deals are put together so why is the volume off so much the last couple of days? Last Thursday they did the pump and dump but now there is barely 1,900,000 shares traded heading into the afternoon. They have walked the price down .29 cents since Friday's close.
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Post by dudley on Aug 4, 2015 19:36:19 GMT -5
It's appearing more and more likely they will go 0 for 10 unless something bumps the stock price over the floor where the holders HAVE to convert. The way I read it is 10% of the notes are eligible for conversion each day then the ability to convert disappears. Hard to be precise with the less-than-clear language. If the note holders WANT shares (and it seems like they would have or they would never have struck this bizarre deal to begin with) all they have to do is buy them on the open market at these orchestrated low prices. Odds are they can work a deal with their friendly market maker to get the shares without having to chase them up. Again, hard be certain of anything. So MNKD cashes out the notes with no conversions BUT suffers no dilution and gets the 9 million shares back. Thus cash drops $57 million but no more NEW shares are issued. As far as I can tell the 9 million shares coming back are already fully issued and outstanding so there is no reason they can't in turn just sell them in the market to raise cash if they need to. It's not the same as a new secondary where they need to file a prospectus etc. to register and sell a block of NEW shares. So net net this whole exercise gives the noteholders a very sweet exit with bargain shares while not dramatically impacting MNKD. If they wait for the stock price to recover and sell the 9 million shares in the market they might get the full $57 million back and end up with no dilution at all. Al will always be there as a last resort backstop in my opinion, or as others have speculated maybe SNY gets into the picture. Again, not saying ANYTHING definite because this is one bizarro agreement but that's how things appear to me. If I'm wrong I'm not going to feel bad because this thing is a major head-spinner. We'll know for sure in less than 2 weeks then get back to just the "normal" craziness of the stock. Just verified in the 10-Q the 9 million shares loaned to BOA ARE already included in the current outstanding share count. It would seem logical that they could register (but they probably already ARE registered since BOA used them for shorting and supposedly shares must be registered before one can use them for that purpose) and sell those shares on the market as I postulated above with zero dilution. Again something that will need clarification - but a very significant bit of the puzzle.
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Post by tbone on Aug 4, 2015 19:42:37 GMT -5
I remember being told the 9 million on loan were not in outstanding share count. What in the 10q indicates otherwise?
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Post by dudley on Aug 4, 2015 19:54:31 GMT -5
I remember being told the 9 million on loan were not in outstanding share count. What in the 10q indicates otherwise? The part where it says they ARE in the share count. 9. Common and preferred stock "Included in the common stock outstanding as of March 31, 2015 and December 31, 2014 are 9,000,000 shares of common stock loaned to Bank of America, N.A. under a share lending agreement in connection with the offering of $100.0 million aggregate principal amount of 2015 notes."
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Post by bill on Aug 4, 2015 20:06:24 GMT -5
One point I haven't seen discussed is anyone's guess on what percentage of those 9 million shares are still short--particularly after the mid-May to early June run-up from $3.46 to $7.32? It would be nice if BOA still had to cover a significant percentage of those shares before 15 August. Could make for an interesting swing between the end of the conversion and the 15th of August. OTOH, somehow I suspect those shares are no longer short, sigh... I don't think there's been enough volume for the notes owners to be purchasing or converting shares at the same time that 9 million short shares are being covered. All conjecture on my part.
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Post by mannmade on Aug 4, 2015 20:09:40 GMT -5
My guess is they are too smart for that and have played this game too many times to get caught short.
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