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From the end of this month, Lanstead will effectively be a 15% shareholder in NFX, and as I showed with the numbers yesterday they benefit a lot more from a higher sp than a lower one.
So I am confident that they have foresight of what is happening and will be vocal to the board about achieving an uplift in the sp. I doubt they will be a silent shareholder.
With that in mind, the first point of assesment is mid-March, with the valuation based on the average sp from the preceding 20 working days closing price. This means that the valuation kicks off mid February.
I would like to think that wheels would be turning by then.
Cheers!!!
Wacca In addition to Soups reply it is also in line with the recent deals for IPF drugs so brokers valuation is based on previous market events
I absolutely hope the brokers are correct then Lol, I appreciate the reply,thanks
Wacca, it’s the brokers valuation.
“ A deal could have a $360-450m headline value, based on precedents, although the upfront would be likely to be in the $10-20m range. ”
Mars,out of curiosity,how do you arrive at NXP002 having a potential value of $360m when we are sat in this position? I know the word potential is key in that sentence but that is a monstrous figure. If that figure was the case and anything looked remotely like it was going to happen,do you think the management team etc would have bailed out etc the way they have?
Interesting point Mars, I guess if a buyer came along then Lanstead may be interested in a sale if the price was appropriate.
What is clear from the numbers is that they will benefit if the offer is higher. Also it is likely that they will be a 'presence' in the mind of the board as they will be no doubt be communicating with the company regularly and wanting as high a return on their subscription as possible.
Soup thanks for detailed numbers that all makes sense, I was thinking along the lines, NXP002 has a potential value of $360m (not sure if that is total or capital cost only without royalties). Then we have NXP004. Either the products can be liscensed separately or a NFX could be sold avoiding royalty payments (although some pension funds do buy royalty shells for the ongoing guaranteed income). So if it comes to the crunch where will Lanstead sit will they be happy with 50cents which only covers NXP002 or will they hold out for more. I suppose it will depend whether they have potential better returns for their capital elsewhere and whether they introduced a buyer
Alongside the Lanstead profit level, NFX would receive the following amounts over the 20 months.
At 1p NFX would receive £825k
At 2p NFX would receive £1.65m
At 3p NFX would receive £3.3m
At 10p NFX would receive £8.25m
At 20p NFX would receive £16.5m
Quick view of the full subscription over 20 months.
At a constant 1p share price Lanstead would net £275k profit.
At 2p Lanstead net £550k profit
At 3p Lanstead net £825k profit.
At 10p Lanstead net £2.75m profit
At 20p Lanstead net £5.5m profit
Hence they will be aligned with other big shareholders in wanting the sp as high as possible.
As I say, its in their interest to see a higher sp.
Should also add that they could also just sell a quantity of shares that matches the exact amount owed to NFX, then the would get to the end of the agreement and remain a shareholder.
Mars, its in Lansteads interest to see the sp higher as part of their subscription. Here's my thinking (bear with me if its teaching your gran to suck eggs).
Using just the first part as an example. NFX created 22m shares at 1.5p which they give to Lanstead, who then sell them across 4 months and give the proceeds to NFX. So this 22m at 1.5p has a value of £330,000 which is pledged to the company.
The base price for NFX is 2p, if this is met they get 100% of the money due. Above or below they then adjust accordingly.
So, working with the following valuations.
If the sp is 2p for the duration (to make the maths easier than a fluctuating sp), bang on the base valuation, so NFX are due 100%.
Lanstead sell 5.5m shares at 2p each month to cover the money going to NFX, netting £110k each month or £440k in total.
They then pay NFX 4 equal payments of £82,500 (£330k/4).
So with this base of 2p, Lanstead net a profit of £110k. (£440k deducting £330k to NFX)
If the sp is 3p then....
Lanstead sell at 3p netting £165k each month or £660k in total.
As the sp is 50% above the base price, they owe NFX 150%. So £82,500 add 50% = £123,750
So with the 3p, Lanstead net a profit of £165k (£660k deduct £495k to NFX)
Then with sp of a low of 1p.....
Lanstead sell at 1p netting £55,000 each month or £220k in total.
As the sp is 50% below the base price, they owe NFX £41,250
So at 1p Lanstead net a profit of only £55k (£220k deduct £165k to NFX)
In conclusion if the sp is at 3p, then Lanstead make 3 times the profit they would do at 1p share price.
Anyone with a view, are they aligned with the large holders and the bod to get fair value for the assets or is it their policy to align with a buyer for a discounted quick buck. Whatever their stance they will be a player in a bid.