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Post by traderdennis on Mar 12, 2018 10:42:22 GMT -5
It's a modestly positive event. Financial impact is not enormous, but it reduces some near term debt and cash outflows, while signalling that the Mann Group continues to work with the company on friendly terms, which is something that we didn't really know until now - since Al Mann's death, there has been total silence from them regarding their stake and future intentions. Mann Group basically does not get anything major in return for the debt extension, so that is definitely a positive friendly gesture. The quantities involved are not big enough to warrant a large share price reaction though, I think. A normal biotech stock would go up a few percent on the news, I guess. With MNKD, who knows. They get a conversion price of $4.00 per share, so they have forward looking options. if nate is correct, then the Mann foundation will reap a huge windfall, which is fine.
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Post by casualinvestor on Mar 12, 2018 12:06:45 GMT -5
Looking at the Jan 2020 options, those cost more than $1 per share around $4. So the Mann group is getting some value out of this restructure.
As to whether they would immediately cash in that option at $4 and take the shares, then sell them on the open market as soon as they are received (causing headwinds) is up for debate. I'd say it's unlikely. They are guaranteed interest and payment through 2021. If the stock is at $8 in 2019, then keeping the debt and earning interest, which can buy stock at $4, means that interest is 2x as valuable as when the stock is at $4.
All conjecture and math, plus some wishful thinking. Corporate finance is not my thing.
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Post by babaoriley on Mar 12, 2018 12:54:38 GMT -5
The $4 is a signal that, "look, we think the stock will actually surpass $4 withing two years." Now, whether that "signal" is genuinely meant or not, I don't know.
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Post by hellodolly on Mar 12, 2018 12:59:11 GMT -5
The $4 is a signal that, "look, we think the stock will actually surpass $4 withing two years." Now, whether that "signal" is genuinely meant or not, I don't know. Or if it's 'genuinely' a signal? SMH
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Post by bill on Mar 12, 2018 13:24:53 GMT -5
This restructuring probably implies that no good news is expected by them in the short term. Otherwise, they would have waited to restructure their debt until after the good news, when a share price increase would have bought off more debt. Sigh...
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Post by hellodolly on Mar 12, 2018 14:33:12 GMT -5
This restructuring probably implies that no good news is expected by them in the short term. Otherwise, they would have waited to restructure their debt until after the good news, when a share price increase would have bought off more debt. Sigh... This restructuring takes a bit of time to make these deals. I don't think they want to wait, regardless of news. They can't predict, (absent what they already know) what tomorrow can bring in the business that can have a meaningful impact.
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Post by traderdennis on Mar 12, 2018 14:38:50 GMT -5
Looking at the Jan 2020 options, those cost more than $1 per share around $4. So the Mann group is getting some value out of this restructure. As to whether they would immediately cash in that option at $4 and take the shares, then sell them on the open market as soon as they are received (causing headwinds) is up for debate. I'd say it's unlikely. They are guaranteed interest and payment through 2021. If the stock is at $8 in 2019, then keeping the debt and earning interest, which can buy stock at $4, means that interest is 2x as valuable as when the stock is at $4. All conjecture and math, plus some wishful thinking. Corporate finance is not my thing. I would read into that the Al Mann trust is all in with MNKD. I would highly doubt the would sell their "options" today. It was a thank you for restructing their debt.
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Post by dreamboatcruise on Mar 12, 2018 17:07:57 GMT -5
Too many words. Too many words. Can someone sum it up for me? Is this another mini round of dilution? How long is our runway now? This means the Mann Foundation is still helping us, right? If one assumes we'll be over $4 by 2021 and that therefore the Mann Group will convert at $4, this would amount to a total of 23 million shares. That amounts to approximately 19% additional shares, which is a rather large amount comparatively speaking rather than "mini". It also raises no cash. That will also need to be done soon to extend the runway. At this rate it would not at all surprise me to see 200 million outstanding shares to get us to profitability.
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Post by mnkdfann on Mar 12, 2018 18:44:08 GMT -5
Looking at the Jan 2020 options, those cost more than $1 per share around $4. So the Mann group is getting some value out of this restructure. I think you meant 2021? Anyway, FWIW, I'll just add that the option the Mann Group received is not a regular traded option. It allows the Mann Group to take some principal owing in terms of shares. It's not the same as the exchange traded options you quoted a price for. I'm not at all sure the option right the Mann Group has is transferable to another party.
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Post by traderdennis on Mar 12, 2018 18:59:30 GMT -5
Too many words. Too many words. Can someone sum it up for me? Is this another mini round of dilution? How long is our runway now? This means the Mann Foundation is still helping us, right? If one assumes we'll be over $4 by 2021 and that therefore the Mann Group will convert at $4, this would amount to a total of 23 million shares. That amounts to approximately 19% additional shares, which is a rather large amount comparatively speaking rather than "mini". It also raises no cash. That will also need to be done soon to extend the runway. At this rate it would not at all surprise me to see 200 million outstanding shares to get us to profitability. DBC, The saga plays out by 2021. I see either a valuation of $2 Billion+ ($10+ stock price will dillution) or zero. They would of dealt with the 9 figure insulin purchase and are at making money, or it will be game over and a price below 10 cents. I think this was a fantastic deal for the Al Mann trust.
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Post by sayhey24 on Mar 12, 2018 19:14:57 GMT -5
DBC - One thing Al Mann always did was to buy in on the offerings to maintain control. Would the 23 million maintain control once all the dilution is finished and they right this ship?
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Post by digger on Mar 12, 2018 22:42:28 GMT -5
I would have been more impressed by larger debt relief. They still have about 142 million they owe. Doling out 8 million shares every few months is like death by a thousand cuts. I also would have been more impressed --more impressed, in fact -- if it said they didn't have to maintain the 25 million cash reserve requirement.
Also, does "permit accrued and unpaid interest to be paid-in-kind" mean from here on out they must pay the interest plus the past interest? Before, as I understood it, interest was deferred and accrued. Is that no longer the case?
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Post by Deleted on Mar 13, 2018 3:05:04 GMT -5
Exchanged approximately $1.3 million in principal due May 2018 under the Deerfield facility for 441,618 shares of common stock
$1,300,000 / 441,618 = $2.94
Did Deerfield pay a premium or conducted this when share price was higher?
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Post by mnkdfann on Mar 13, 2018 3:33:39 GMT -5
Exchanged approximately $1.3 million in principal due May 2018 under the Deerfield facility for 441,618 shares of common stock $1,300,000 / 441,618 = $2.94 Did Deerfield pay a premium or conducted this when share price was higher? What you noticed is amusing (to me). The legal document claims the conversion price is only $2.83. I guess lawyers cannot do basic math. Or there is something we are missing. Mind you, it does say approximately. That may explain the discrepancy. Though I don't see how unless they really overstated the principal due. Interestingly, if you use $1.2 million as the principal, you get: 1,200,000 / 441,618 = 2.717281 ( = 2.72 = same conversion rate that applied to the other Deerfield debt) So is it just a typo, did they just get the amount owing off by $100,000? And then fail to notice it, and make errors in the filing as a result? What a gong show. "On March 6, 2018, pursuant to the prior exchange and sixth amendment agreement with Deerfield, the Company exchanged approximately $1.3 million in principal amount of its outstanding 9.75% Senior Convertible Notes due 2019 held by Deerfield for 441,618 shares of the Company’s common stock, at a conversion price of $2.83 per share."
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Post by akemp3000 on Mar 13, 2018 8:37:57 GMT -5
The Mann Group and Deerfield are obviously knowledgeable about what Mike C, Dr. Kendall and team are reporting on their progress behind the scenes, i.e. STAT study release, international term sheets, etc. and made the decision for this transaction even while scripts have not yet jumped. IMO they are seeing the big picture and this transaction represents good news.
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