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Post by deaner3 on Jun 24, 2017 0:14:02 GMT -5
If I'm reading it right
"amount available for future borrowings was $30.1 million" from mann group.
So if all else fails couldn't they activate that loan referenced and wouldn't that cover deerfield payment + 3 more months after cash runs out?
Had enough cash till September
So wouldn't that loan cover October/November/December and into Jan 2018
plus then current sales extend it further as that continues to grow ?
Can someone explain this to me better ?
Did we already take out that 30 million? Or not able to for some reason?
I'm probably missing something but haven't seen this discussed.
Can anyone bring Clarity to my simple mind over it ?
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Post by deaner3 on Jun 24, 2017 0:23:17 GMT -5
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Post by mytakeonit on Jun 24, 2017 1:53:16 GMT -5
Cool your jets ... July conference call will be here shortly to explain  Whatever you need to know. Still waiting for Kauai's BBQ invitation ... maybe Oprah will be interested in joining us? She's in Maui ... |
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Post by promann on Jun 24, 2017 4:14:57 GMT -5
If I'm reading it right "amount available for future borrowings was $30.1 million" from mann group. So if all else fails couldn't they activate that loan referenced and wouldn't that cover deerfield payment + 3 more months after cash runs out? Had enough cash till September So wouldn't that loan cover October/November/December and into Jan 2018 plus then current sales extend it further as that continues to grow ? Can someone explain this to me better ? Did we already take out that 30 million? Or not able to for some reason? I'm probably missing something but haven't seen this discussed. Can anyone bring Clarity to my simple mind over it ? That's a very valid question! Matt has always said that the 30 million loan was always available if they needed to borrow it. I have not forgotten about it but it's nice for this board to be reminded. Thanks |
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Post by anderson on Jun 24, 2017 5:06:43 GMT -5
that 30 mil is for Deerfield arrangement.
"requires the Company to maintain at least $25.0 million in cash and cash equivalents or available"
"and a financial covenant which requires our cash and cash equivalents, which includes available borrowings under The Mann Group Loan Arrangement, on the last day of each fiscal quarter to not be less than $25.0 million"
If they renegotiated and announce is July that Deerfield has lifted this restriction then there is no problem spending it.
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Post by promann on Jun 24, 2017 5:29:36 GMT -5
that 30 mil is for Deerfield arrangement. "requires the Company to maintain at least $25.0 million in cash and cash equivalents or available" "and a financial covenant which requires our cash and cash equivalents, which includes available borrowings under The Mann Group Loan Arrangement, on the last day of each fiscal quarter to not be less than $25.0 million" If they renegotiated and announce is July that Deerfield has lifted this restriction then there is no problem spending it. Well then why has Matt been saying they can use it if they need to extend the runway. That's why I think it's a valid question I don't think it's in deerfields best interest to have MNKD fail (IF) that money is their collateral.. But I believe that it is a separate protected available fund if needed because it is a loan that is not even active yet so how can it be a cash equivalent? I honestly don't know but I would like to hear again from MNKD that it is available to extend the runway if needed |
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Post by brentie on Jun 24, 2017 7:11:13 GMT -5
that 30 mil is for Deerfield arrangement. "requires the Company to maintain at least $25.0 million in cash and cash equivalents or available" "and a financial covenant which requires our cash and cash equivalents, which includes available borrowings under The Mann Group Loan Arrangement, on the last day of each fiscal quarter to not be less than $25.0 million" If they renegotiated and announce is July that Deerfield has lifted this restriction then there is no problem spending it. Well then why has Matt been saying they can use it if they need to extend the runway. That's why I think it's a valid question I don't think it's in deerfields best interest to have MNKD fail (IF) that money is their collateral.. But I believe that it is a separate protected available fund if needed because it is a loan that is not even active yet so how can it be a cash equivalent? I honestly don't know but I would like to hear again from MNKD that it is available to extend the runway if needed Matt: I also have question comes through related to some confusion about our cash position and what cash is actually available, so I’ll try to answer that one, because I have actually seen that misrepresented a bunch of times, because many talk about a requirement under the Deerfield debt agreement that we maintain $25 million worth of cash, and I say, we will take it down to as we work into the quarter, $35 million, that means you really only have $10 million available. That’s not actually true. The way that debt agreement was structured is that included not only cash, but also available borrowing. So as long as we have $25 million or more available from the Mann Group, for example, we don’t have to maintain a minimum cash balance under that agreement. So were we able to work out our other issues. seekingalpha.com/article/4021887-mannkinds-mnkd-ceo-matthew-pfeffer-q3-2016-results-earnings-call-transcript |
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Post by deaner3 on Jun 24, 2017 8:37:14 GMT -5
So the mann loan basically covers deerfields cash requirement then so could one of these scenarios happen?
(1) Deerfield simply lifts that restriction and we are good into next year and they get their payment. That's pretty easy and in Deerfields best interest. So think that would happen before they'd allow dilution or worse.
(2) mann group loans more unless they aren't allowed to for some reason but it would be in their best interest to do so as well.
So for those worried about dilution it would would be very easy and simple for the 2 that have the most to lose by dilution to prevent it.
Why would this not happen ? And Mike eluded to his "crystal ball" and "non dilutive" ways of on getting financing as if it was already on the table.
This would fit all of those categories.
I don't know this is what is happening but I'm not worried at all. It's the time to buy before they announce while it's still cheap in my opinion.
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Post by matt on Jun 24, 2017 11:32:34 GMT -5
The minimum cash covenant together with the agreement to subordinate the Mann Group loans was required to get Deerfield to go along with the last debt modification. Essentially they wanted the Mann Group to be on the hook for the first $25 million of loss should bad things happen. This is no different than a teenager having to have a co-signer when they want to buy a car on credit. That means of the remaining Mann Group credit, the company can really only spend $5 million, and every quarter the Mann Group accrues interest on the existing debt, which is charged against the remaining credit line, so the true number is something a bit less than $5 million.
The covenant is there to protect Deerfield, and by extension their fund investors, from a default by MNKD. We can't see the fund agreements that Deerfield has with its investors, but they likely specify a minimum debt to assets ratio and other requirements for each company Deerfield loans money to. As MNKD's credit quality has continued to deteriorate, it is very likely that Deerfield will be barred from offering more generous terms because of their contractual and fiduciary obligations to their bond investors (everybody has a boss!). Deerfield can't ignore their investors, especially since some of those investors are heavy hitters like pension funds and university endowments with professional money managers at the helm. Deerfield is probably precluded from lending MNKD a dime more because the asset write-down at the end of 2015 erased more than $200 million of assets, which caused a big increase in the debt to assets ratio. Loaning more would only make the ratio higher, and Deerfield's investors probably have a contractual covenant that Deerfield can't loan new money to a borrower with a high ratio.
The issue for MNKD is that they don't have enough cash to pay Deerfield the $10 million they owe in July, and to continue the present monthly burn rate, and still have $25 million on the balance sheet come September 30 to avoid defaulting on the Deerfield covenant. That is true even if the full amount available from the Mann Group is drawn down. Most security agreements have cross-default provisions so if Deerfield declares a default on their covenants, that will cause all lenders and creditors with cross-default language to automatically declare their credit in default as well, meaning that essentially all debt becomes due immediately with the first default.
What is likely to happen is:
1. Deerfield agrees to swap the $10 million coming due for equity at a big discount (which they will sell immediately), or
2. MNKD will find a PIPE investor who will buy shares at a big discount (which they will sell immediately) and MNKD will use the money they raise from the PIPE to pay Deerfield.
Either way, default in July is not likely because the company still has enough cash; it just doesn't want to spend it if it doesn't need to. If MNKD can issue shares for the $10 million owed, they can continue operations as normal and reach September 30 with barely $25 million still on the balance sheet, thereby avoiding a September default as well. While that is mathematically feasible, suffice it to say that would be skating on extremely thin ice to head into Q4 that way. MNKD has no choice but to increase the number of authorized shares and tap the equity markets for funding, or to issue preferred stock since that has already been authorized. Praying for some deals to happen is a good idea, but the company cannot bet that an unsigned deal will happen in time to cover payroll and debt service for Q4, and sales aren't making enough of a cash contribution to move the needle.
So the company does have $30 million in credit, but they are very much handcuffed if they try to spend it for any reason other than to keep Deerfield happy.
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Post by deaner3 on Jun 24, 2017 11:46:50 GMT -5
Lots of probably's and assumptions in that post Matt
I know it is your opinion and you are allowed to have it. But you don't know that they will give additional shares at a significant discount and that they will "immediately sell them"
That is what the short sellers want everyone to believe will happen but that is just negative speculation just like the buyout , UAE deal, partnership talk etc is positive speculation.
Will be interesting to see what happens here. I'm pretty confident stock price will be 3 times higher than now at minimum by end of summer being conservative. That would still be less than $1 presplit but makes any shares people can purchase now a screaming good buy for the future
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Post by bmkb24 on Jun 24, 2017 12:21:15 GMT -5
Lots of probably's and assumptions in that post Matt I know it is your opinion and you are allowed to have it. But you don't know that they will give additional shares at a significant discount and that they will "immediately sell them" That is what the short sellers want everyone to believe will happen but that is just negative speculation just like the buyout , UAE deal, partnership talk etc is positive speculation. Will be interesting to see what happens here. I'm pretty confident stock price will be 3 times higher than now at minimum by end of summer being conservative. That would still be less than $1 presplit but makes any shares people can purchase now a screaming good buy for the future I couldn't have said it any better. |
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Post by deaner3 on Jun 24, 2017 12:41:40 GMT -5
Another thought on Matt's idea that Deerfield would buy more at big discount and then sell them (to drive stock price down)
Would it be in deerfields best interest to do that?
They already own a ton of shares (at high pps) and got more at like $$1.15 or 1.18 or similiar awhile back. They don't want those initial shares to lose more value and lose the gain on the ones they just got a few months ago. That doesn't help them. They want stock price to go up on all shares.
It would benefit them more to get stock at current pps or higher and hold so that price per share on ALL the shares goes up. That would make sense on how they'd make money. But either way it will be good for stock price imo if the solution comes from Deerfield or mann group because their interest and the companies are in alignment
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Post by mnkdfann on Jun 24, 2017 12:43:49 GMT -5
The issue for MNKD is that they don't have enough cash to pay Deerfield the $10 million they owe in July, Do you happen to know off the top of your head the precise (or approximate) date in July the payment is due? If so, please share. (I imagine it is public info and available in some SEC filing, but I don't have the time to look right just now.) |
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Tinkerbell
Researcher
Watcher of the Skies
Posts: 143
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Post by Tinkerbell on Jun 24, 2017 12:51:29 GMT -5
They have to have a minimum of 25M reserved in cash at all times under Deerfield terms. Did you factor that in?
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Post by compound26 on Jun 24, 2017 12:54:19 GMT -5
They have to have a minimum of 25M reserved in cash at all times under Deerfield terms. Did you factor that in? No, this is not true. They can spend that $25M to zero as long as at quarter end they have a line of credit (like the line of credit they have with Mann Group) of at least $25M. This has been explained many times, including by Matt P. himself. |
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Whatever you need to know.
