Exchange Agreement PR

IMHO, if the note holders can buy the shares at 4.22 strike once they convert, then opko would be saving money only if the share price exceeded 4.94 ((4.22 - 3.50) + 4.22 = 4.94). Opko loses the difference of every cent above the 4.22. Anything above 4.94 in the future if they convert, Opko saves money, and this move seems to show that they think they will. So if Opko has the cash to buy the remaining 150M in notes, after this conversion, then everything will be hunky-dory. Right?

If they didn't, or the rest, is what I meant by in the future. I'm saying opko secured the difference in sp increase.

This is all so odd. First: how was Frost able to purchase shares yesterday and may 4th when they must have been negotiating this and he had inside information? Second, putting that aside ,why buy shares at all until after this when you want to raise the price over the next four days to issue as little as possible? Third, the amount of $55mm is particularly interesting, b/c that is the amount of 2023 converts issued in feb 2018 with conversion px of $5/sh, of which Frost/Hsiao own $30mm of the $55mm. They don't own any of these converts (in fact, they were partially issued to pay Frost ~$29mm in 2019 for debt he had given the company). It is better to convert the $4.22 than the $5, but the $5/2023 converts allow the company to convert whenever they want and they didn't do that. The $55mm is a big coincidence, or not, but I am puzzled as to what this all means. Theoretically, they should want to push the price up over next 4 days, but you would think noteholders built protection of that in this agreement (i.e. no material announcements over next 4 days); and why not exchange his/Hsiao's $30mm that convert at $5 at these prices vs. giving discount to others (unless its a favor to friends - I don't know who owns them, and I agree that TASE volume yesterday is very shady). The covering of pro-rata jefferies short comment seems like a red-herring as they issue shares that just cancel out any shares that were shorted so that is irrelevant. Perhaps they just figured ~$4.00 is close enough to $4.22, it stops interest payments and cleans up a bit, but who approached who, why only 1/4 of the convert class choose to do this: its all very hard to understand. Did anyone get an answer from Company as to the rationale for this, who approached who, etc? One other thing is I don't think the company anticipated today's move down or Frost wouldn't have bought (as small as it was) and also given any real investor already included these shares in their share count so today's event is immaterial except for the difference b/w $4 and $4.22 minus the saved interest of ~$10mm. Also, if we think the TASE volume was shady, the fact it was neutral-to-up means most investors didn't think this drop would occur. But I don't know what to make of it all.

I just don't understand why here why now. Why not when the stock was trading at $5 heading into record Q4 earning? Or do we think it wasn't possible to convince the convert owners that owning the stock at $5 vs. $4.22 a "bargain"? In hindsight thats true, but the company appeared to be firing on all cylinders when covid was peaking.

Then there is this 4 day period wrapping up right before a potential announcement on testing hubs. Why not wait until after? Does frost think now is a good time because they WON'T get any contract? Or is he doing Jeffries a solid by giving them stock at 3.5 now, before a contract is announced. I am sure the company has no idea which way the contract will go. But I am positive big clients at Jeffries have friends in high places...that likely DO know which way the government is leaning at this point. Oh yeah...that would be illegal insider trading. That never happens...

And why 55M? Or they planning to repay the remainder in cash next Feb? So many questions...

As of 12/31/20, according to Bloomberg, there were four holders of the convert with more than 30 million each:

Highbridge Capital: 47,920,000 (including 3,000,000 added in Q4 2020)
Linden Advisors: 45,063,000 ( " 2,000,000 " " )
Graham Capital: 38,545,00 ( " 7,500,000 " " )
Aristeia Capital: 35,850,000 ( net of 14,500,000 sold in Q4 2020)

My assumption is that one or several of these entities are participating in the exchange

I was dreaming yesterday...watching the sunset from my porch.  A very nice day had me longing for something like this:

The testing hub announcement comes Monday afternoon or Tuesday morning which is a contract to BRLI for ~$750M over the next 24 months.  The stock skyrockets to $6.50.  Since the exchange agreement is volume weighted price, it might go something like this:

             Close / Volume
Friday:         $3.80 / 9.19M (34.922)
Monday:       $4.50 / 15M  (67.5)
Tuesday:      $5.25 / 25M  (131.25)
Wednesday: $6.50 / 22M  (143)

(34.922 + 67.5 + 131.25 + 143) / (9.19+15+25+22) = $5.30 exchange price instead of $3.50 floor which is 10.37M shares instead of 15M.

Then I woke up with an empty Brandy, slapped myself, and refilled.

Dnr08, I guess you’re not buying on the dip.