Food for thought.
From what I understand debt holders (unsecured) in DKTS are waiting on a proposal to move their debt into ISBG in the form of some type of convertible preferred. If this were to occur, the new security would need to be held at least 6 months assuming an audit was completed, before any conversions could occur. The debt would re-tack to the new security.
In addition, it would create a fair amount of dilution to that security.
Wouldn't it make financial sense to clean up the DKTS trading vehicle given that an audit is being done anyway on the products of which 75% ownership was transfered to ISBG? Why?
My reasoning/ Pierce appears to be a very selfish person who doesn't understand how the financial markets work. I'm sure he's infatuated with the idea of a "clean" ISBG entity. Rather than dealing with a new convertible preferred from the old DKTS debt, and given that DKTS has 25% stake for the most part in ISBG, it makes financial sense for him to clean up the DKTS entity and keep the debt holders in that entity. Based on his prior history, and the lack of any reasonable offer to debt holders, I'm guessing that is what he is thinking.
Interestingly, I was told by the attorney for ISBG who handled the DKTS debt issue, that there is indeed a "basement" conversion price, hence, making that debt not a true death spiral and that the price per share of DKTS would have to increase significantly to even reach a level where debt holders could convert and have it make economic sense.
My guess, is that he will clean up this entity which may even involve a reverse split, and given that it should track at a 75% discount to the market ccap of ISBG, would trade on its own merit.
However, until we see an audit done for the other entity, nothing can happen.
If that audit is done, than the risk/reward on DKTS is compelling in my opinion. Time will tell.
Just my thoughts.
