Ligand (LGND) Breakout! Message Board

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Biotech / Medical : Ligand (LGND) Breakout!

LGND 185.97

-0.4%

Feb 10 3:59 PM EST

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To: Zeuspaul who wrote (6727)	9/16/1997 1:04:00 AM
From: Webhead	of 32384

Warrented Ruminations: Being relatively new to the wonderful world of LGNDWs I'm still trying to figure out the logic behind Ligand encouraging exercise and what that might mean for us all. So please forgive me if I'm rehashing really basic stuff. -Should it matter to Ligand when the warrents are converted? As Bernie pointed out, there is the cost of capitol to consider and all other things being equal Ligand would preferr $7.125 per warrent NOW vs. in 3 years. Does the dilution matter to Ligand? After all 6.5 million extra shares appearing upon exercise represents a whomping 20% dilution. (I'm assuming that warrents are converted into newly issued shares; is this really the case?). But, since Ligand has committed to this dilution 3 years down the pike, would there be some reason NOT to do it now (I suppose if LGND were to make a secondary or offer shares to call ALRI they would not want even more current dilution). - I was struck that if you figure out how much Ligand would get if the warrents were converted ($7.125 X 6.5 Million= $46 Million) and add in $10 M from the ALRI coffers and $10 M cash from the diabetes/leptin or whatever deal you end up with Ligand's contribution for the ALRI call. Henry posited a similar scenerio except he substituted 2 million or so Ligand common for the warrents. Perhaps it was Ligand's intention all along to bundle up the LGNDW with the ALRI shares in ALRIZ with an eye towards early conversion to finance the majority of the ALRI call. I'm not trying to rumor-monger here, I'm just thinking out loud and hoping that someone with a lot more financial knowledge will step in and give us an idea of how plausable this is. -If Ligand were to encourage the early conversion of their warrents how would they do it? I suppose they would have to somehow compensate for the loss of the premium and leverage. Has anyone seen this done before? I was toying with the idea that Ligand might offer another warrent in exchange to make up for the difference in premium and leverage. Say if (post dilution) Ligand common drops to 16 from 20 then they might offer a new warrent with a strike of $14.75 or so to make up for the lost premium. Or I suppose they could offer some sort of discount using the current LGNDW ( like for every 10 converted you get 1 back,( a blue light special good for this week only)). Does this make any sense whatsoever? Ed

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