MAJOR CAVEAT: This is just my first cut, a general overview that doesn't account for all possible scenarios or variables. Folks should do their own analysis and please feel free to dissect and highlight any errors I may have made. Unless I am mistaken, this looks to be a pretty impressive deal that will get DCTH across the finish line without having to worry about BK. Yeah, they are buying at a discount, but they are also buying $30-$50M worth of DCTH common stock. And, they will be buying as early as next month I believe.
What am I missing?
Two Rounds of Buying.
I. Rights Offering:
1. 2 Purchasers (assuming but only found Discover Growth Fund listed in Agreements--thoughts anyone?)
2. Rights Offering: buy DCTH common stock at $1.75/share
3. Date: 1 July 2018
4. Subscription Period: 1 July – 31 July
5. Rights Offering Extension Period: +30 days (31 August) or
expiration date reasonably determined by BOD
6. Once Rights Offering has ended, Backstop Offering kicks in.
II. Backstop Offering:
1. After Rights Offering period ends, Backstop Offering kicks in
2. Purchasers can buy shares of common stock not issued in the
Rights Offering
3. Price: $1.75/share
4. Terms of Backstop Offering:
a. Every 15 business days Purchasers must buy the lesser of:
i. $1,000,000 worth of Purchase Shares or
ii. 20% of the dollar trading volume of DCTH common stock 5
business days preceding Purchase Date.*
iii. Option for purchasers can offset (if so chooses)
proceeds from purchase against notes owed to DCTH.
5. Purchasers must buy every two weeks until the expiration of
agreement
III. Purchasers commit to purchase $30-$50M DCTH stock, though commitment is reduced by amount of Rights Offer + bi-weekly purchases.
*Example of 4.a.ii (20% dollar trading volume). Using the date range of 15 Feb - 22 Feb 2018, the dollar trading volume (adjusted for 500/1 split) was roughly $2.3M (225,903 shares @ $10.36 avg.). 20% = $468K. In this instance, EACH purchaser would be required to purchase $468K as it is less than $1,000,000 for that particular two week period.
