Elan Corporation, plc (ELN) Message Board

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Biotech / Medical : Elan Corporation, plc (ELN)

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To: biostruggle who wrote (3427)	10/22/2002 6:11:35 AM
From: Icebrg	Read Replies (2) of 10345

Marvin, you wrote: >>Elan has to maintain collateral equal to QSPE even though due in 2004 and 2005. That is where tie up of cash comes from. The original QSPE are short 450 million, so Elan has to put up more cash in kitty or other investments. Elan has 1 billion in cash in 4 th q. A lot is tied up. 450 million supporting QSPE>> I don't think this analysis is correct. There is no requirement for Elan to "set aside" any "real" cash to cover any shortfall in the EPILs. If there was, that would have been evident already in the Q2 report. It wasn't. So, all the cash with Elan in December of next year will be available to pay off the LYONs, if these are put and Elan decides to settle with cash. In 2004 and 2005 the EPIL debts as noted by, you will fall due. If and how Elan will be able to meet that debt is unclear at this point in time, but Elan's obligations in that respect do not influence their ability to meet their obligations under the LYONs. As long as we don't know what effects the current asset disposal program will have on the operations and the balance sheet of Elan it is really not possible to judge the company's ability to meet its obligations in 2004 and later. Anyone shorting Elan at the current levels seems to be counting on: - that Elan will not manage their current disposal in a satisfactory way. - that Elan will not find any way of wriggling out of their LYON obligations. - that Antegren will come up negative for both Crohn's disease and MS. - that there will be no or only a limited recovery in the biotech values that Elan holds on and off the EPILs. - that there will be no efforts to buy the company once the SEC investigation has been concluded. And apart from that they will most probably have to wait at least until 2004/2005 before they will be able to cash in. I feel that is a lot of short- and long-term risk to take on for a potential gain of a dollar or so when compared to their risks on the upside. I agree with Bill that it is difficult to understand the motivations of those who are at this point adding to the short position in Elan. Especially as it should be clear that covering in the case of an emergency (as perceived by the shorts' community) might become a very painful experience. Either these "people" are really dumb or there exists a grander scheme that we haven't yet been able to grasp. There should be much better shorting objects out there somewhere than Elan at sub 2 dollar levels. Ice

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