Neotherapuetics possibly has a breakthrough drug - NEOT Message Board

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Biotech / Medical : Neotherapuetics possibly has a breakthrough drug - NEOT

NEOT 1.919

+4.3%

Jan 17 4:00 PM EST

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To: dalroi who wrote (89)	4/18/2000 1:49:00 PM
From: Marty	Read Replies (1) of 204

Stefaan, Thanks for your take on it. I've seen toxic convertibles kill other companies, so I am sensitive to the potential problem. I would have thought the same thing in this case except for the fact that these lenders are the same ones who did similar financings with NEOT in the recent past and they have a boatload of shares from those deals. They must still like the company as they passed a potential distribution of more shares in the previous deal in order to get favorable consideration on this follow on deal. That was in the press release. First, I am not sure they can legally short shares and cover with the shares they get in the conversion. Even if they did that, the amount they gain on the transaction they would lose on the value of the shares they have in their portfolio. Then again, if they just sell out shares they have in inventory instead of shorting to drive the price down to replace the same shares by converting, I mean, what's the point? I haven't gone through this deal in detail and don't even know for sure whether or not there are any floors in it although they were in on the previous deals with them and it just never came up. It just seems to me from the complicated terms that the negotiation was over keeping it a good and fair deal for the lenders instead of letting it become a bonanza windfall for them. The company CEO stated they felt that the stock was currently undervalued and that they wanted to repay loans at future higher prices. The protection seems to be on the upside so, combined with the stock position the lenders already have, everyone seems to contemplate higher prices. Maybe the DD they did to make that kind of investment gives them some insight as to what NEOT has going for it and they want a bigger position.

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