SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Biotech / Medical : Biotech Valuation
CRSP 55.93-0.6%3:59 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Biomaven who wrote (28106)9/24/2008 11:58:25 AM
From: IRWIN JAMES FRANKEL  Read Replies (1) of 52153
 
>>Any "make up payment" to the government has to be in equity. That's basically what I suggested a few days back.

Here is a table of Present Values, a tangible illustration to set out the continuum of pricing possibilities in dollars:

Total loss, - stuff is worthless: $0
FSV - $20B
FV - $50B
HMV - $90B*
Face - $100B*

How much would you want to "make up"?

BB is on record as saying he thinks we should buy close to HMV, call it $85B. So his approach would infuse in this example (assuming MtM at FSV already took place) $65B ($85B-20B).

I agree with your comment that adding a "hard to measure" liability to the balance sheet of the selling firm would not be productive. But I would point out that whether you burden a firm with a liability or equity it is in fact a burden that will impair the firms future ability to raise funding. After all - it is the BS of these firms that are the problem.

Further, I would suggest that the closer your "make up" amount gets to the $65B, the greater will be the burden on the firm and the greater will be the reduction in the effectiveness of the program.

So how much equity would you impose in this illustration?

With respect,

ij

FSV - Fire sale value
HMV - Hold to Maturity Value
FV - Fair Value
MtM - Mark to Market
BS - Balance sheet

* Inherently, we embed in this illustration different interest rates to discount the flows to this present value table.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News