Debate: 2019-01-30 $5.7M Note Deal Iliad/Fife T
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Posted On: 03/02/2019 7:31:53 PM
Debate: 2019-01-30 $5.7M Note Deal Iliad/Fife
This is a strategic debate, just to attempt understanding the latest developments - which we fail a little.
Let's roll back a few weeks to our contemporary darkest hour, which IMHO was 2019-01-30: The poor $5M net lending agreement (face $5.7M) with dividend 5M Warrant shares at 30c to Iliad Management (John M. Fife) https://www.sec.gov/Archives/edgar/data/11756...425d8k.htm
- Secured Notes w/ all assets but Company IP for 6 month
- 10% interest per annum (-> 6% half year)
- 5M $0.30 Warrant shares sold at $0.50 = $1M
- Lender's Return $5.7M + $1M = $6.7M -> 34% profit on $5M
- Notes $0.50/sh initial conversion price
"As of January 30, 2018, the outstanding balance payable under the Prior Note (2018-06-26) was approximately $6.0 million.",
this might be the reason for the poor note deal.
+++
2018-06-26 Note w/ Iliad/Fife https://www.sec.gov/Archives/edgar/data/11756...221d8k.htm
- Unsecured Notes for 6 month
- 10% interest per annum (-> 6% half year)
- $5.7M face value for $5M investment = +14%
- $0.55 initial conversion price
- Option to 15% premium buyback by company
+++
So the new notes 2019-01-30 could be seen as an expensive 6 month extension of the prior notes 2018-06-26 for roughly $2M extra costs. However, since the conversion price has been reduced, it only makes sense that both notes will be converted here: Cash is king.
The new notes came right before the first use of partnership language (planning) on 2019-02-01 https://www.cytodyn.com/media/press-releases/...l-with-fda
And on 2019-02-25 on the SH CC we all got the message: Actual partnership negotiations http://www.youtube.com/watch?v=fF1649x5R9M
Since 2Q19 company raised $11.21M cash by selling shares plus the $5M on 1/30 via the note 'extension'. $16.21M in total.
If you look up Iliad/Fife's lending history, you see he was/is involved with quite questionable names like FNCX (defunc'ed), INPX and the like.
+++
The above items are factual, now let's debate the why?
- Why didn't they just raise the new note's $5M net in the fundraiser campaign on much better term?
- Why did they issue the notes at all knowing partnership negotiations are about to close soon? (How soon is soon?)
This is actually the only big weird issue at hand we could have. When it happened, we softly debated that here and w/ trding on the other channel. Because of the relative small size of the amount, we simply shrugged it off and maybe it is just so, a nothing-burger to ignore even in the advent of a partnership deal.
Looking forward to our fruitful debate.
PS-1: No, it is nothing else but a debate and please let this just go through as is w/o bashing or claims of having an agenda.
PS-2: I know trding has analyzed this deal as well and the new notes dividend shares hitting at month end, hence creating some waves. But that tiny trading artifact has little meaning for us. We are more interested in the overall picture here.
(copy here - especially since trding has his eyes on this one as well)
This is a strategic debate, just to attempt understanding the latest developments - which we fail a little.
Let's roll back a few weeks to our contemporary darkest hour, which IMHO was 2019-01-30: The poor $5M net lending agreement (face $5.7M) with dividend 5M Warrant shares at 30c to Iliad Management (John M. Fife) https://www.sec.gov/Archives/edgar/data/11756...425d8k.htm
- Secured Notes w/ all assets but Company IP for 6 month
- 10% interest per annum (-> 6% half year)
- 5M $0.30 Warrant shares sold at $0.50 = $1M
- Lender's Return $5.7M + $1M = $6.7M -> 34% profit on $5M
- Notes $0.50/sh initial conversion price
"As of January 30, 2018, the outstanding balance payable under the Prior Note (2018-06-26) was approximately $6.0 million.",
this might be the reason for the poor note deal.
+++
2018-06-26 Note w/ Iliad/Fife https://www.sec.gov/Archives/edgar/data/11756...221d8k.htm
- Unsecured Notes for 6 month
- 10% interest per annum (-> 6% half year)
- $5.7M face value for $5M investment = +14%
- $0.55 initial conversion price
- Option to 15% premium buyback by company
+++
So the new notes 2019-01-30 could be seen as an expensive 6 month extension of the prior notes 2018-06-26 for roughly $2M extra costs. However, since the conversion price has been reduced, it only makes sense that both notes will be converted here: Cash is king.
The new notes came right before the first use of partnership language (planning) on 2019-02-01 https://www.cytodyn.com/media/press-releases/...l-with-fda
And on 2019-02-25 on the SH CC we all got the message: Actual partnership negotiations http://www.youtube.com/watch?v=fF1649x5R9M
Since 2Q19 company raised $11.21M cash by selling shares plus the $5M on 1/30 via the note 'extension'. $16.21M in total.
If you look up Iliad/Fife's lending history, you see he was/is involved with quite questionable names like FNCX (defunc'ed), INPX and the like.
+++
The above items are factual, now let's debate the why?
- Why didn't they just raise the new note's $5M net in the fundraiser campaign on much better term?
- Why did they issue the notes at all knowing partnership negotiations are about to close soon? (How soon is soon?)
This is actually the only big weird issue at hand we could have. When it happened, we softly debated that here and w/ trding on the other channel. Because of the relative small size of the amount, we simply shrugged it off and maybe it is just so, a nothing-burger to ignore even in the advent of a partnership deal.
Looking forward to our fruitful debate.
PS-1: No, it is nothing else but a debate and please let this just go through as is w/o bashing or claims of having an agenda.
PS-2: I know trding has analyzed this deal as well and the new notes dividend shares hitting at month end, hence creating some waves. But that tiny trading artifact has little meaning for us. We are more interested in the overall picture here.
(copy here - especially since trding has his eyes on this one as well)
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