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I’ve just re read the update Rns again and for what its worth I think it is exactly as R P Stock has suggested altho I’m no expert by any stretch but here’s my explanation as to why for anyone who is/was as confused as I was initially .
Firstly there is a new loan to replace the outstanding one to OF plus the additional subordinate loan which includes the additional funds being provided by DP /AS and armistice which effectively will be used to pay off all outstanding unsecured creditors and the administrators fees (I presume) with the option of then converting this debt pile into an equity stake at some future date , the grand total being somewhere in the region of circa 15 million .
On top of this , if the former is accepted by the shareholders at the vote , Armistice will then subscribe for a further £15 million by way of an equity subscription at 6p a share to provide the working capital facility the company needs over the next 12 months …to allow them to exit administration and the 2 sums combined (15+15=£30 mill ) will then equate to taking circa a 70% stake in the company once the loan is converted into equity .
In addition to the debt portion and the equity subscription ,my understanding is that Armistice will also have the further option of converting the multiple range of warrants they will be awarded as a result of the above arrangements being approved and that would enable them to further increase their total stake to up to an 87% max at a future date maybe ?
So as RP stock suggests it’s a 30 million input by Armistice for a 70% stake , which presumably values the company once the first 2 phases go thru at circa 43 million or thereabouts
Happy to be corrected as always but as I stated previously at least with this proposal we’ve got some hope, as opposed to having just Bob , even if the dilution is pretty dire
GLA
The warrants are priced at 8p and then 10p.
Fairdealer - yes indeed, exactly that, I had come to a similar conclusion.... only a matter of when and not if. That was why our two directors took another piece of the pie at a very advantageous entry point. None of the LTH in 4D will get out with their original investment intact with the exception of our directors
I believe it is 3 parts. They are going to convert loan from Oxford into equity (around 14-15 millions) and equity subscription of £15 millions at 6p. These both together has 70% for them. So it is 27-30 millions for 70%. If they exercise warrants that will make ownership higher over 80%. But it is not 78% for 15 million.
Crusty a delist is a likely outcome. American Hedge funds are no mugs. Unfortunately for us, our 2 directors are in on the act. Bit players at that, but none the less extremely useful to Armistice
FFS - Absolute no brainer
Already voted in ii - I agree with others in thats its a no brainer if you want to end up with "some value" rather than the nothing we currently have. ie 6p starting value vs zero
If you are with Interactive Investor you should have received an email this morning enabling you to vote electronically
What’s the deal regarding all the short positions. Surely they will need to buy back the stock as soon as it’s resisted.
Is this how it works ?
640m shares (warrants) at circa 6p? So Armistice will effectively own 78-80% of the company but indirectly through the issue of 640m warrants.... if they convert more than 30% they would have to make a "bid" methinks. So how do they exit without a sale or a delist? Can't claim to know, so just opening it up for discussion.
So what will the new company be worth and what price on relisting? 820 million "shares" for $15m.....? And for a company that is, to all intents and purposes, wholly owned by Armistice.....? Not much methinks BUT hey, anything is better than nothing and as I had pretty much given it up for dead, a pleasant surprise for the start of 2023.
Reminds me of Redx Pharma - good drugs, good science, and (at the time of being put into administration) appalling management. On coming out of administration, lots of changes were made to improve Redx, and now they are making huge waves in the clinic. Looking forward to seeing a similar trend here
With considerable debt and huge dilution. Note debt to be converted into equity. It will be interesting to see how it plays out.
On 24 June 2022, 4D pharma plc was placed into administration and James Clark and David Pike of Interpath Advisory were appointed as joint administrators to 4D pharma plc. Trading of the Company's Ordinary Shares on AIM was suspended on the same day. The Company was placed in administration by Oxford Finance who held approximately $13,216,482 of secured debt against the Company's assets. On 7 October 2022, this debt was acquired by Armistice, a U.S. based specialist healthcare investor, with a view to converting the debt into equity alongside an equity investment to bring the Company out of administration.
As an intermediate step towards the Company looking to exit administration and seeking the lifting of the suspension of the Company's Ordinary Shares on AIM, the Financing Package was offered by Armistice (with no input from the Joint Administrators). The equity component of the Financing Package is subject to Shareholder approval. Under the terms of the Financing Package, the Company and Armistice have agreed an amendment to the Loan Agreement which allowed a further $1,600,000 to be made available to the Company, a new Subordinated Loan Agreement (under which Duncan Peyton and Alex Stevenson act as lenders to the Company alongside Armistice) which allows an additional $600,000 to be made available to the Company and an equity fundraising totaling up to $15,000,000. Additionally, amendments have been made to the Loan Agreement which would allow outstanding amounts due to be convertible into Ordinary Shares and/or Pre-Payment Warrants (subject to Shareholder approval).
To come out of administration they have to prove they have the next 12months finances in place. So it depends what news comes out in that 12month period to increase the sp.
I guess where we all went wrong was with the financials and not the drugs in the portfolio. 6p might seem like value but with the company losing over 1 million pounds a week would any cash bailout from a placing be able to keep the company alive for long? All good ramping again but if it means losing everything because the outgoings are very high then about time we hit reality. Also the 6p would be after a very large dilution as I understand it.
One would have to decide whether they feel DDDD can recover but based on financials and not false hope that some drug will be worth millions many years later. If a person has an average of 36p could they even get half of that money back if the SP recovered to 18p or would that probability be better on another undervalued AIM low market cap pharma such as Valirx moving to 25-30p where the financials are stronger. It all depends on what each individual thinks is the best solution but careful attention is needed only on the financials at the moment to see if DDDD is worthwhile and whether it presents an opportunity to build or sell.
HNY to all invested here and yes I too feel it’s a total no brainer here to vote for the proposals put forward given virtually all of us had written this off ,(in our minds at least) so we have to be grateful for something I guess
I also totally get the negative vibes about Duncan p & Alex S as whilst they’re great scientists, business gurus they most certainly ain’t , so something needs to change on that score for sure
That said though both those 2 put £750k into the last fundraise and are now putting forward another £150k each thereby giving them another 2.5 million shares each if my maths are right
So My own take is on that alone ,surely no one in their right mind would be stupid enough to then put forward a further £150k each in here if they didn’t know that something was clearly imminent or at least in the offing ?
It’s also coincidence now with hindsight of course that that big trade trf took place shortly after armistice took control on the 27/10 and in some ways if they had offered the full package to clear everything including w/c for a further 12mths is it any surprise really , that they didn’t want anyone else involved at this stage, as I’m not sure why they would and even more so if their due diligence had proven successful , otherwise why have they it ffs is what my first impression would be .
On that latter point, I’d defo have no issues adding here but firstly I’d need to see some tangible evidence either with positive progressive scientific news or definitive milestone payments being received ,b4 I did , as we must be due something on that score pretty soon .
Tbh after that friday Rns I’m just so grateful we might get something after months of not knowing so here’s wishing all invested here all the very best for a healthy &prosperous new year to all 4d’ers everywhere GLA
There is no decision to make for me, its something vs nothing.
On a positive note other parties were interested, but the backdrop of 4Ds current administration position was/is to complex. Armistice must see very good risk reward profile. I'm expecting positive newsflow through 2023 and for Armistice to sell on at some point for a sizable profit.
I will be buying more on re list, as the odds of an improving SP, should now be tipped in our favour
Michael at first I felt relief that we had not gone down the pan. But now I feel anger again that this BOD are still there making decisions and claiming a fat salary for incompetence. I wont be listening to any future conference calls from them. Good luck to all genuine holders.
For a hedge fund to invest in a healthcare company they must be hoping for, if not expecting, very high returns i.e. a multiple of their capital at risk. So I'm tempted to think that they have good grounds to be looking forward to main news in the short term e.g in 2023 that will send the SP from 6p to who knows what double digit levels. They have also the means of leveraging further their returns through warrants. Will they take a seat on the Board? Probably yes but the question is whether they care / are in a position to add value to the business in a way that some institutional investors do e.g. in the case of AIM-listed SCLP where the presence of knowledgeable IIs seem to have given a big impetus if not transformed the business.
However, the fact that MSD (Merck), Seres or other parties that must have looked at 4D in closer detail recently and haven't ended up investing in 4D (for whatever reason) should tells us that there still serious risk in the business. Or ... and this is just speculation, could it be that the hedge fund, as lenders / putative lenders, were in a more pivotal position and, knowing the value in the business, they managed to elbow out potential strategic investors (minority investors or buyout candidates) from the sector?If that was the case, the lenders/putative lenders would have had cooperation from the directors whose chances to retain a role in 4D was / is to cooperate closely with the people who can pull the strings: the lenders who drove the company into admin at first place.
That's because any new party on the scene e.g. a pharma company OR a value-adding institutional investor (with a general focus or specialising in healthcare) would be very unlikely to want the to-date directors continuing to run the business.
After all, the lenders are to land in a much better position now than they were at the time when they called the administrators vis-a-vis a company that has the same value!!
But ultimately agreed with what other investors are saying: the only rational option for retail shareholders is to vote Yes given that the alternative is liquidation. And we hope for the best scenario to materialise.
Michael, I agree the mis-management and incompetence displayed by Peyton and the CFO is off the scale. They can’t remain in my view. My only slight comfort in the situation is that the Hedge Fund will likely look for an outright sale as soon as possible. Hopefully the Lab has made progress and they will be commercially focused in the coming weeks and months.
Happy new year to all
There were interested parties who were put off by the Administrators.
A conclusion to consider, Oxford pulled the plug and very much had control. Oxford were taken over by Armistice, an American hedge fund, who like most hedge funds rarely take prisoners.
The get out of jail deal allows Armistice to take up the Lion's share of the fund injection, along with a minor investment from DP and another Director. Ordinary PI's are only required to approve the deal with NO right to any New shares.
Without our approval the deal fails and as made crystal clear the Company goes into liquidation.
PI's have little choice, accept and get something or reject and lose everything.
However unpalatable, it's a no brainer.
It is clear Duncan and colleagues have been helpful to assist the Administrators( and Armistice), one wonders what is in it for him? He may have been sold a background deal, which could easily backfire. American Institutions are not Charitable bodies, will want a good return on their investment. Is it plausable DP and Co could be allowed to continue managing 4D given their record? DP is not Executive material.
Accepting this deal will give PI's something.
Happy New Year all.
AIMO
He can't be trusted. He's already destroyed the company through mismanagement. Current BOD need to go.
It is a concern that no other buyers or investors came forward - they probably could have had the company on the cheap.
Which then brings us to Duncan - is he investible and can he be trusted?
Whilst this outcome is better than nothing, I can’t but help we are jumping from one loan shark to possibly another. just my opinion!
Almost forgot to wish investors a healthy, happy and prosperous 2023 ...irrespective of what happens to 4d.
Have a nice one this evening!
JR thank you for your note which prompted me to post sooner than I would!
First it is certainly good news that the company is coming back. I'm also pleased and encouraged that the company has kept on making progress on the clinical front although administration has, probably, slowed the process down significantly.
But, I think positives stop there: we haven't heard anything about a new CEO. I'd be disappointed if gaffe prone and (grossly?) negligent Duncan Peyton was going to carry on being in charge. DP may have driven some important initiatives (e.g. with MSD) but we need a CEO who's much more proactive, competent and hard working and is able to draw II investors who can add help value.
It is also disappointing that after having approached 50 or so companies in the sector, as per update issued in September if I recall well, no noteworthy sector player has taken a stake in the business - let alone not opted for a buyout at a price anywhere near we thought where the company value was e.g. US$150m+ The reasons given in the RNS about the lack of offers because of timing or incompatibility with putative buyers' strategy are, in my view, questionable at best.
So we have a "rescuer" in the shape of ... a hedge fund that has named its terms http://www.armisticecapital.com/about
Of course it is better than nothing but one can't help thinking that if CEO and the Board had done their job probably we could have easily avoided the serious dilution we are facing now.
Now, at a share price of 6p we should be looking at a a floor: in the first few months, funding won't be a pressing issue and hopefully investors (retail at least) may well flock to the stock with some help from a milestone-related newsflow (if that happens). Then we could look at a multiple of the post-administration price. But that time window won't last long and 4D will have to make most of it if we are to expect a RedX encore (nb. in the case of RedX a new CEO landed).
In case of 4D if management and CEO in particular don't full advantage of such brief period - where the market won't be worried about funding and runway- and there are no major milestones on the clinical or business front then 4D will become officially a penny share.
The Board have not only mismanaged the business since the Oxford Financing news but also the way they handled investor communications was dismal i.e. in the 12-18 months leading up to administration. So they'd better up their game big time if they carry on.
Given the above early thoughts, I will play it by ear and look out for any information that comes our way. I think there's bound to be. But my current plan is to try and sell half of my holding at a suitable opportunity (e.g. if we were to hit 20-25p) and leave the rest in case a really good scenario materialises. If Peyton is the CEO then I'd probably sell the majority of my holding at the earliest opportunity. Let's see what happens!
207m shares issued at £0.06 = £12.42m
415m pre payment warrants paid for @ £0.0575 exercisable @ £0.0025?? = £23.8m
Then it states:
'One of the Ordinary Warrants so allotted shall entitle the holder to subscribe for one Ordinary Share at an exercise price of £0.08, and the other shall entitle the holder to subscribe for one Ordinary Share at an exercise price of £0.10.'
See below
For Ordinary Shares subscribed for under the Subscription Agreement, Armistice has agreed to pay a price of £0.06 per share. For Pre-Payment Warrants subscribed for under the Subscription Agreement, Armistice has agreed to pay a price of £0.0575 per warrant.
If the subscription obligations in the Subscription Agreement oblige the Armistice to subscribe for Ordinary Shares representing more than 9.9 per cent. of the enlarged issued share capital, Armistice will instead subscribe for Pre-Payment Warrants. Pre-Payment Warrants are exercisable at any time on payment of £0.0025.
Armistice will be allotted two Ordinary Warrants, for every one Ordinary Share or Pre-Payment Warrant that Armistice is allotted pursuant to the Subscription Agreement. One of the Ordinary Warrants so allotted shall entitle the holder to subscribe for one Ordinary Share at an exercise price of £0.08, and the other shall entitle the holder to subscribe for one Ordinary Share at an exercise price of £0.10.
Any thoughts
BB