Question about DNDN stock. Any Bankruptcy attorneys here? No bashers/pumpers.

This is one of the more honest place to go for information on DNDN. A lot of what has been posted here has turned out to be right. More than most investment boards

So here is the background...

The deadline for a stalking horse bid is December 29. The minimum allowable stalking horse bid is $275,000,000. If you take $275,000,000 and divide it by the outstanding shares, a bid for this amount would come out to about $1.50/share. The stock currently trades around $.15

Here is the question....

If there is a bid by December 29 for $275,000,000, would 1 share of DNDN stock valued now at about $.15 then be worth over $1? Please reply only with facts. TIA

 

Appears no one really knows. Ridiculous.

 

No, it wouldn't. Did you forget about the $650,000,000 debt overhang which is coming due and the reason for this restructure. Think: Who comes first, bond holders or those holding common shares. Answer that question correctly, subtract $650,000,000 from the above amount you propose plus additional fees associated with this debt and restructuring disaster (hey, assume no additional expense attributed for this - results are still the same), and you are back at negative shareholder equity. The common stock is worthless...end of story....zero.

 

Uncle Sam comes first in payout.

Obama

 

I am OP. The stalking horse bidder would not inherit that debt. That is why this is a bankruptcy. What the fuck. I thought we would get some intelligent people on this thread.

 

Ok maybe you are right. I guess the bondholders get whatever the stalking horse bid is. Is that right? Am I right though that the winner of the stalking horse bid does not inherit the debt?

 

Intellegent people on this board understand the basic concept that once the bankrupcy proceedings conclude, the common as of today will have zero value. Gone - poof. Bondholders get equity, company gets new owner, bidder gets first poke and common shares get used as wall paper.

Whether there is a stalking horse bid arranged or not, the common shareholder is wiped out. Period. End of Story. Put a fork in it, it is DONE.

 

A stalking horse bid gives first poke at the assets to a bidder as arranged with the company. They do not inherit the debt, as the bankruptcy proceeding continue, and the arrangement DNDN has is for new equity to be issued to the bondholders in whatever comes out of this (either through an accepted bid or as a stand alone). As for the common - gone.

 

ok thanks. not even buying one share for 10 cents now. thanks for the explanation.

 

Why does Thompson hang around? How much Provenge does he sell?

 

If a stalking horse bid came before December 29, would the public be told? Or do they want to gather any and all bids by the deadline and then announce it? TIA.

 

The bidding procedures have not been approved by the court as yet, so this whole discussion is a bit premature. However, according to the draft procedures Dec 29 is the deadline for stalking horse bids (there can be more than one bidder at this point). It is generally not in the best interest of the debtor to prematurely cut short the process, and it is not in the bidder's interest to submit the bid until near the deadline. Don't expect to hear if (or who) the stalking horse bidder is until Dec 29 or very soon thereafter.

As a practical matter, none of this makes a difference. If there is a stalking horse bid it will do nothing but start the real bidding process which has a Jan 27 deadline. There is an advantage sometimes to being the stalking horse, but only if the court allows for some cash compensation to the stalking horse if they don't win the auction.

Of course if there is no stalking horse bidder, it will immediately end the auction and the bondholders will take the company private, end of story.

 

In your opinion will there be a staking horse bid? And do you think that would be the winning bid?

 

My read of the tea leaves, and it is simply that, is that the Deerfield affiliated funds will make a bid for the magic $275MM. I say that because if you look at the 8K filed when the company declared bankruptcy, there were two substantially identical agreements outlining the agreed reorganization plan. One was signed by four Deerfield affiliated funds, the other by numerous other bondholders. There is absolutely no reason for there to be two sets of documents and two different attorneys unless Deerfield is planning to take a position that is adversarial vis a vis the other creditors.

What many people don't realize about bankruptcy is that creditors have an absolute right of offset. For example, if a debtor owes me $100 and I bid $110 for an asset, I only have to pay $10 in cash and I can give up my claim to satisfy the balance. An allowed creditor claim is the same as cash in bankruptcy!

When their legal fees, accrued but unpaid interest, and face value of the bonds are included, Deerfield funds can pay the $275MM with virtually no additional cash investment. That pretty much screws over the other bondholders who will have to fight with other unsecured creditors for what is left of the cash (now less than $100MM and falling fast) while Deerfield walks away with the assets and has something they can sell for cash even if the eventual return is just 20 cents on the dollar. Deerfield has estimated how much they will recover if they get their share of the remaining cash and proceeds from a Chapter 7 liquidation, and how much they will recover if they buy the company with a credit bid for $275MM. If Deerfield gets the assets for a credit bid of $275MM and sells them off at 20 cents on the dollar, they will net $55MM in cash which is more than their fair share would be in a Chapter 7 liquidation.

Honestly, I don't see a white knight swooping in and buying the assets for some really attractive price. Pharma companies buy what they need to fill out their pipelines and product portfolios, almost regardless of price, and if DNDN was not attractive enough at a $1 billion price tag it won't be attractive now just because the price is lower. So it will come down to a bare knuckled fight among the bond holders to salvage the maximum amount of cash from a bad situation and, for the reasons stated above, I think Deerfield has set themselves up to be the winner in that scenario. However, note that "winner" still means "smallest loser" in this context; Deerfield and all the other creditors will still be losing a lot of money. Shareholders will lose all.

 

Nobody will buy this pig no matter how much lipstick gets slapped on it. At BEST, it goes private equity, and when it does the axe will fall. Mass layoffs with just two weeks notice, and those that are "lucky" enough to stay (i use that term sarcastically) will have their salaries slashed and replaced with "shares" of stock in the new enterprise, that have basically ZERO value unless it ever sells FOR A PROFIT, which it won't. SCREWED EITHER WAY. Now wheres that fork?!

 

Lipstick doesn't matter; Deerfield may buy it just so it can control the sale of assets. However, Deerfield might be looking to maximize cash by selling the assets to used equipment brokers and let everything else go. In that case the product dies a sudden death and the employees will be out of a job.

 

Hey, momo, what'd I just say? This pig won't sell as a viable company. $275M makes bond holders whole, and what company in their right mind is going to bid that? This mess goes $175M at best, to a chop shop, and assets are liquidated. There will be no jobs in 2015 on the Titanic.

 

Stop pumping this "Deerfield" bullsh*t! You havent been right ONCE about anything, why would you be believed now?

Case in point, a prior post from you about Deerfield in yet another thread, that turned out to be total crap! AND I QUOTE,

"Something good will be announced on Monday, and it's aint a pre-packaged bankruptcy. Co can't file bankruptcy if they are solvent.
Ever since Tom Amick took the helm in July, he's been working hard negotating deal with J & J, my guess they some great news with us.
I have been researching looking from the outside of the company for a very long time, but decided to take a huge position yesterday. My cost basis 1.13, which I'm quite happy with the bargain. The biggest shareholder for the note is Deerfield. They owns over 200 mil plus of the notes, in June 30, 2014, they also took a 10 Million shares common worth more than 30 Mil plus. I don't think they will shoot themselves in the foot by going to bankruptcy.
JPM currently hold 40 Mil in Notes also. They did the package for dndn years ago. It would hurt their rep if the company they refi going to bankruptcy. employees keep up the faith, this is a great therapy for patients. This company's needs to get strongers. Millions needed it.
How would you like the head line" First Ever Cancer Approved Biotech declared Bankrupty. This ain't look good for anyone. Company's cash and cash equi is over 300 Mil, total sales of provenge us is 350 Mil or so, EU is launching in the corner. My guess they will do a partner with someone on Europe sales. The tide is turning on this company. My research is based on readking 8K and 10Ks and none from the winds or shorts sellers with agenda."

Youve been EXPOSED, now GO AWAY!

 

Not my post junior, I am the one that predicted that there would be a prepackaged BK, and that is exactly what has happened (so far my crystal ball has been batting 1000). I am afraid the "Deerfield bullshit" as you term it is the typical behavior of underwater investors who are out to grab whatever they can as the ship sinks.

Investment funds don't care about the company, employees, patients or anything other than minimizing their loss, and when it comes down to playing hardball in bankruptcy court this is what they will likely do. Not nice people at all.

 

Does anybody know the monetary size of the dispute with Glaxo regarding discontinuance of the development agreement? The hearing to approve the auction procedures has been delayed until Dec 17 (from Dec 9 originally) to provide Glaxo more time to file an objection.

Note that this will likely delay the deadlines for the stalking horse bid and other bids by a week or so each, but that is up to his honor to decide.