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Post by babaoriley on Mar 4, 2014 13:03:22 GMT -5
harshal, as I understand it, the shares are not converted at $5, they are converted more or less at the current market price, but cannot be converted for less then $5 per share - the $5 is only a lower limit on the conversion price.
If the FDA disapproves, I'd like to see DF be able to get $20 million out of MNKD - I doubt it. Also, I think DF is on the hook to lend MNKD another $20 million if the FDA goes thumbs down - that loan will feel good - OMG, can you imagine!
DF took a big risk getting in, they continue to take risks, but I believe they are going to "mitigate" that risk (don't want to use the word "hedge" here or alcc will be all over me), by selling this stock between now and the AdCom date, or possibly the PDUFA date (I believe RAK will find that out from IR). When you think about it, this is as good a time as any for that many shares to hit the market, as the volume has been quite large lately. To me, this only makes sense if they can sell a bunch of these shares - they have so much invested, they don't want to lose big money, so that's why I think it's structured in such a way that they can sell immediately.
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Post by harshal1981 on Mar 4, 2014 14:09:22 GMT -5
I know that it is not converted at $5. Its minimum $5. As per the filing. It will be converted at average of last three trading days preceding the date of conversion. I just assumed $5 for the convenience for the calculation. However, I do not agree with your statement that DF can't recover $20 million if FDA rejects. In my opinion, if MNKD doesn't pay-up interest and principle as per the schedule, it is considered defaulting on their debt and liquidation/Ch-11 can easily get them $20 mil back from the intellectual property of Technosphere and Oncology molecules it self. And that too, when they have already made 200% on their $120 million investment as per my explanation (a profit of $200 million), who cares even if they couldn't recover $20 mil.
Second thing i would like to point out that, DF is NOT obliged to pay last tranche of $40 mil if FDA rejects. I am not sure what you are referring to when you say that DF is on the hook to lend MNKD another $20 mil if FDA goes thumbs down.
and last, I do not think shares are restricted. DF can sell any time they want.
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Post by babaoriley on Mar 4, 2014 19:50:28 GMT -5
harshal, as to the $20 million, check out silentbob's post, he references it, too; it's in the Amended Reg Statement.
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