Avid Bioservices Inc (CDMO)

[exwannabe]

More on PPHMP share conversion.

That current reserved number, 46M shares for outstanding PPHMP, might look high. And in reality it is. It will never convert to that amount.

The problem is that change-of-control clause conversion issue. If BP offers $2 a share for PPHM, I am entitled to cash in my $25 face value of PPHMP at that rate (12.5 shares per share in that example). So the lower the buyout, the more shares I would get.

No big issue, but in theory it is possible that a buyout at $0.000001 would give me an "astronomical" amount of shares. And the company would have to reserve for such. And that is why the .85 (or whatever it is) change of control cap exists, it is simply to avoid having to reserve the shares for something that will not happen anyway.

What does this mean?

If PPHM wants to sell the full series-E they need to reserve a fair number of shares against it. Something like 110M more shares (far more than the real potential dilution). Thus, they need these shares authorized if they want to sell the remaining preferred.

And that is my story and I am sticking to it