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Post by lakon on Feb 21, 2016 12:06:13 GMT -5
There have been a lot of posts lately about the dire cash situation. Many have suggested that raising cash would be difficult, very dilutive, and destructive to existing shareholder value. Many have hoped for Al Mann to provide a bailout as a lifeline to the company and essentially to the rest of the shareholders. I would like to suggest that there is another way forward that is relatively easy, non-dilutive, and constructive to existing shareholder value. If raising cash is necessary, MNKD could use a rights offering (issue). A rights offering would give shareholders the chance to decide to help Mannkind succeed and to help themselves stay whole at the same time. MNKD could raise a few hundred million dollars if fully subscribed. If MNKD wanted to be innovative, they could make the offer directly to shareholders to minimize banking fees. The savings on the banking fees could be part of the customary discount offered. In this scenario, Al Mann could still be putting up around $100-200 million, but so could the rest of the shareholders. No shareholder could complain if he/she had the opportunity, but chose to walk away. It is a real shame that rights offerings are not more common. Nevertheless, a rights issue is a path few have mentioned, but a solution worth investigating. A rights offering to all shareholders would be a fair and moral thing to do, something in short supply on the Street. Al Mann's brother, Robert, was once quoted as saying, "Alfred is a bit of a moralist." A rights issue would avoid a few moral hazards, such as the sole reliance on Al. We already saw the results of the TASE offering. We know how Wall Street has treated the company. I think a rights issue is something that Al and other shareholders could get behind. If you really believe in the company, as a part owner/investor, why not pony up? ( www.forbes.com/forbes/2006/1009/064.html) Why not bring this up at the next shareholders meeting? And so, my fellow Investors: ask not what MNKD can do for you, ask what you can do for MNKD. |
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Post by mnkdfann on Feb 21, 2016 13:55:03 GMT -5
If raising cash is necessary, MNKD could use a rights offering (issue). A rights offering would give shareholders the chance to decide to help Mannkind succeed and to help themselves stay whole at the same time. MNKD could raise a few hundred million dollars if fully subscribed. If MNKD wanted to be innovative, they could make the offer directly to shareholders to minimize banking fees. The savings on the banking fees could be part of the customary discount offered. In this scenario, Al Mann could still be putting up around $100-200 million, but so could the rest of the shareholders. No shareholder could complain if he/she had the opportunity, but chose to walk away. It is a real shame that rights offerings are not more common. Nevertheless, a rights issue is a path few have mentioned, but a solution worth investigating. A rights offering to all shareholders would be a fair and moral thing to do, something in short supply on the Street. Al Mann's brother, Robert, was once quoted as saying, "Alfred is a bit of a moralist." A rights issue would avoid a few moral hazards, such as the sole reliance on Al. We already saw the results of the TASE offering. We know how Wall Street has treated the company. I think a rights issue is something that Al and other shareholders could get behind. Rights offerings are unpopular for a reason. So of course many shareholders could and would complain. "Shareholders don't like rights issues. Any company that gives its investors the unwelcome choice between stumping up more cash or seeing their existing holding diluted can expect to take a significant hit to its stock." www.thisismoney.co.uk/money/investing/article-2412182/What-shareholders-rights-issue.htmlen.wikipedia.org/wiki/Rights_issue |
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Post by kc on Feb 21, 2016 15:32:49 GMT -5
Best alternative long term is to either sell the company or get a 50% ownership partner. Rights sale or any dilution would be very unpopular
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Post by turk74 on Feb 21, 2016 16:24:52 GMT -5
A rights offer - underwritten by Al Mann or his affiliate - would be a 'fair' way for the company to raise cash and protect the stock price. It is fair because if all shareholders participate to their full percentage, then there would be no dilution to any shareholder. It wouldn't matter if the offer price were $1.00 or $.50 per share. The key is that Al Mann underwrite the offering, which would be a major statement to the stock market that Mannkind is here to stay. In that instance, a rights offer would be remarkably fair to all shareholders who would have the opportunity to participate at the same price for their respective number of shares and not be diluted by the offering. Even if an offering prospectus stated that Al Mann would only purchase 'his percentage' of the offering, other shareholders would be able to participate and not be diluted by the offering.
Shareholders would not have to participate. it would be a choice. So, if the stock were to go down after the announcement, then shareholders could choose not to participate. if the stock were to go up - in spite of the apparent dilution, then shareholders could participate and sell at a gain. Typically, rights can be made transferable and have a value in a trading market. I would recommend to Matt that the rights not be made transferable. This would allow the stock to trade higher when the news of this type of offering is released and understood.
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Post by mnkdfann on Feb 21, 2016 17:51:45 GMT -5
A rights offer - underwritten by Al Mann or his affiliate - would be a 'fair' way for the company to raise cash and protect the stock price. It is fair because if all shareholders participate to their full percentage, then there would be no dilution to any shareholder. It wouldn't matter if the offer price were $1.00 or $.50 per share. The key is that Al Mann underwrite the offering, which would be a major statement to the stock market that Mannkind is here to stay. In that instance, a rights offer would be remarkably fair to all shareholders who would have the opportunity to participate at the same price for their respective number of shares and not be diluted by the offering. Even if an offering prospectus stated that Al Mann would only purchase 'his percentage' of the offering, other shareholders would be able to participate and not be diluted by the offering. It is not 'fair' to existing shareholders if the shares are offered at a customary discount. Because then it penalizes those who are unable or unwilling to invest more than they already have. There is really no debating that point. There are several good reasons why companies try to avoid these rights offerings. This includes that they are unfair. And also that they signal to the market that the company offering the issue is typically in dire straits. Al underwriting the issue is, IMHO, meaningless so far as statements go. If the market cared what Al thought, the offering on the TASE would not have been the fiasco it was. And the share price today would not be below $1. |
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Post by matt on Feb 21, 2016 18:08:16 GMT -5
Rights offerings are used precisely because the typical discount that comes with secondaries is "unfair". The rights offering gives shareholders the choice between investing more or letting somebody else dilute them. Not a pleasant choice, but a choice. The fact that the company is short on cash is no secret, so this may be the best way to handle it.
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Post by turk74 on Feb 21, 2016 18:25:36 GMT -5
There is a reality at hand that MNKD is running out of cash quickly - a dire situation to say the least - there is no way to sugar coat it. This is not the first time. The company has completed repeated dilutive offerings including the TASE debacle and the Mann conversions of debt and the warrant stock transactions. While those higher priced transactions may 'look good' now to a retail shareholder who does not have the ability to invest more but wants to hold stock, it does not change the situation the company was in then - or is in today. Those transactions diluted the shareholders, some of whom would have participated the 'at the offer' if they could have - but they could not. The directors of this company are absolutely considering all alternatives to address the near term and intermediate term cash situation etc. - that is their job. Hopefully they will or do have some choices. One of those choices might be to raise cash in the capital markets - which will undoubtedly be dilutive to current shareholders, at least some of whom may want to participate in any favorable terms offered if they believe additional cash would extend the life and prospects of the company. The original poster has suggested a rights offer as a way to include current shareholders and minimize dilution with an assumption that Al Mann would participate. I have no idea if Al Mann has any intention of putting more money into the company. However, if he did, thee is no question it would be well received by the market for the common - even if the market had no regard for Mr. Mann's perspective for the future of Afrezza or MNKD, the market would most certainly respect his money. Just look at the TASE deal itself. Virtually no one understood it (including me), yet that little roller coaster brought the common all the way back up to about $2.75 per share once the deal was pronounced on again! You are right that a retail holder who has no money or interest in investing more into MNKD will not like the dilution a rights offer means to him/her. However, those who participate will not be diluted - which is what makes it inherently fair. The key is for Al Mann to steep up and announce he is doing his share - or even underwriting the entire deal (to raise $200 million or more). If he doesn't step up - a cash raise will hurt everyone equally. if he does step up in the context of a rights offer, this company will buy meaningful time, shareholders can participate and my bet is that the stock will go up.
Rights offers are not unfair. However, they are just not expedient. it is highly likely that if MNKD goes to the capital markets it will be to do something private as they have done in the past.....and the shareholders will not have the right to participate - they will only have the right to watch.
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Post by anderson on Feb 21, 2016 21:14:18 GMT -5
I would rather see a rights offering than a public offering.
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Post by lakon on Feb 23, 2016 12:04:34 GMT -5
If raising cash is necessary, MNKD could use a rights offering (issue). A rights offering would give shareholders the chance to decide to help Mannkind succeed and to help themselves stay whole at the same time. MNKD could raise a few hundred million dollars if fully subscribed. If MNKD wanted to be innovative, they could make the offer directly to shareholders to minimize banking fees. The savings on the banking fees could be part of the customary discount offered. In this scenario, Al Mann could still be putting up around $100-200 million, but so could the rest of the shareholders. No shareholder could complain if he/she had the opportunity, but chose to walk away. It is a real shame that rights offerings are not more common. Nevertheless, a rights issue is a path few have mentioned, but a solution worth investigating. A rights offering to all shareholders would be a fair and moral thing to do, something in short supply on the Street. Al Mann's brother, Robert, was once quoted as saying, "Alfred is a bit of a moralist." A rights issue would avoid a few moral hazards, such as the sole reliance on Al. We already saw the results of the TASE offering. We know how Wall Street has treated the company. I think a rights issue is something that Al and other shareholders could get behind. Rights offerings are unpopular for a reason. So of course many shareholders could and would complain. "Shareholders don't like rights issues. Any company that gives its investors the unwelcome choice between stumping up more cash or seeing their existing holding diluted can expect to take a significant hit to its stock." www.thisismoney.co.uk/money/investing/article-2412182/What-shareholders-rights-issue.htmlen.wikipedia.org/wiki/Rights_issueNeither popularity nor complaints determine whether or not it is the right thing to do. If Al is going to pony up $100-200 million more, I can do my part, and I'd like a chance to do so. I can think of several other ways MNKD gets about $500 million without dilution. Putting it all together gives them another billion. How do you think Wall Street is going to react to that? It will be positively explosive, and the shorts, not smart enough to get out now, will be saying, "You sank my battleship!" |
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Post by Deleted on Feb 23, 2016 12:07:29 GMT -5
Neither popularity nor complaints determine whether or not it is the right thing to do. If Al is going to pony up $100-200 million more, I can do my part, and I'd like a chance to do so. I can think of several other ways MNKD gets about $500 million without dilution. Putting it all together gives them another billion. How do you think Wall Street is going to react to that? It will be positively explosive, and the shorts, not smart enough to get out now, will be saying, "You sank my battleship!" can you post them here please if you can? |
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Post by mnkdfann on Feb 23, 2016 12:34:32 GMT -5
Neither popularity nor complaints determine whether or not it is the right thing to do. Fair enough. But it is not the right thing to do, regardless. |
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Post by lakon on Feb 24, 2016 13:56:08 GMT -5
Neither popularity nor complaints determine whether or not it is the right thing to do. Fair enough. But it is not the right thing to do, regardless. Perhaps I should not have used the word, right, as I prefer not to argue right and wrong. While it may be the correct and right (conservative) thing to do under certain circumstances, some may object, as you do. I would rather argue that in six months, it may be a good tactical decision to use a rights offering to reward shareholder optimism. If it fails to raise enough, dilution would always be an option, and bringing in new shareholders is supported by the data. At least, all shareholders get the same offer with a rights issue. Whether or not you can or will participate is up to your own decisions that brought you to this point in time. Good luck! |
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Post by sweedee79 on Feb 25, 2016 1:30:04 GMT -5
I am unsure what all of the options are for raising capital... But, its not a matter of right or wrong... fair or unfair.. The company needs money.. Whatever option is chosen... I hope it will be the best one for shareholders, the company and to ensure the success of Afrezza..... any option would be better than BK. We aren't in a position to quibble.... the company will do what it has to.
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Post by lakon on Feb 25, 2016 14:27:48 GMT -5
Neither popularity nor complaints determine whether or not it is the right thing to do. If Al is going to pony up $100-200 million more, I can do my part, and I'd like a chance to do so. I can think of several other ways MNKD gets about $500 million without dilution. Putting it all together gives them another billion. How do you think Wall Street is going to react to that? It will be positively explosive, and the shorts, not smart enough to get out now, will be saying, "You sank my battleship!" can you post them here please if you can? Here are a few options. I don't have time to explain right now, but they don't need all the money at once, just a backlog to cover negative cash flow and debt payments through cash flow market operations in secondary markets, depending on timing of payments... 1. Rights Issue + Warrants ~ $500 million 2. RLS Deal ~ $102.25 million 3. Mintaka/Gates Deal ~ $100 million (like Jobs got) 4. Afrezza Japan Deal ~ $100 million 5. Afrezza China Deal ~ $100 million (ORMP got $50 million for a promise of a product) 6. Afrezza Saudi Arabia Deal ~ $50 million 7. Afrezza Israel Deal ~ $50 million 8. Sell Valencia ~ $25 million 9. SNY Termination Agreement ~ $75 million These are all deals done or possible in the next 12-18 months. Dollar figures are a WAG based on similar deals for upfront payments, milestones, licensing/partnership fees, and/or product pre-order backlogs. Off the top of my head, that's over $1 billion. Shorts may disagree. They are hoping for BK, but that's just Bad Karma. |
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Post by bradleysbest on Feb 26, 2016 10:07:46 GMT -5
I like your thinking! Heck, just a couple of those panning out will greatly help the cause.
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