Friday, March 11, 2016

Okay Now! Who'd Like To Control KaloBios (Post Ch. 11) -- Win A Fabulous FDA PRV -- And Crush Martin Shkreli Into A Fine Dust, All In One Blow?

This is not off-topic -- but it is all (primarily) good Friday fun, just the same. If you are serious about this topic, do go read all the posts at this site.

Overnight it seems that the first "stalking horse" bidder in the so-called debtor-in-possession financing sweepstakes has filed for the required auction process -- in the Delaware federal bankruptcy courts, related to funding the completion of the proposed Savant deal, on behalf of KaloBios. If you want to top the current offer, you'll need to move quickly: objections are due by St. Patrick's Day, and the first hearing will be on March 21, 2016 -- in Delaware bankruptcy court.

Nominally, the bidding is for just the right to finance the Chapter 11 reorganization of KaloBios. But in fact, and practice (as is often the case with relatively small bankruptcies), the winning bidder may well be in a position to effectively control the future of the public company, once it resumes NASDAQ trading, post Chapter 11. [Put that in your pipe, and smoke it, Mr. Shkreli.]

At present, only $10 million -- in a $3 million chunk, and then a $7 million chunk, later -- is the outlay. In return, the current bid would get 12 per cent interest on their money, their lawyers' bills paid (at a cap of $200,000), a breakup fee of $300,000 and. . . a right to buy about 50 per cent of the company [math error fixed!], post bankruptcy exit, at $1.75 per share. [The stock stands at $2.20 today.] The shares post exit would all be registered and freely traded on the NASDAQ. So, in sum -- the right bidder could ALSO effectively wipe out Mr. Shkreli's equity on exit.

Why invest perhaps $15 million? Well, if all goes well with the Savant deal -- for a Chagas treatment approval -- the winner ends up with a free Priority Review Voucher, at FDA. Those sell for between $125 million and $325 million, net of expenses. That's why. In addition, you'd be able to crow that you "busted" Mr. Shkreli's last real shot at a capital appreciation bubble, here. A bit from the KaloBios Bankruptcy Reviewed website, then:

. . . .The full DiP financing letter of intent, signed and ready to roll, is attached as a PDF file here, now. . . .

The stalking horse interest rate is 12 per cent; 17 per cent in the event of a default, there are serious post exit equity kickers (a right to buy 3.745 million shares), at $1.75/share, assuming outstanding shares are at about 4.15 million, on exit. . . And those shares must be made NASDAQ public-traded (liquid). . . and at least a $300,000 break-up fee, in the event no deal goes through. . . .

Sound intriguing? If any reader(s) might seriously consider a bid, be sure to read all the fine print first -- as "there be sharks a-swimmin' in that deep briny azure sea, to be sure -- and we are naught but simple privateers, here. . . ." Smiling ear to ear, on a gloriously sunny Friday. . . have a good one, one and all!

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