GTC Biotherapeutics (fka GTCB)

[DewDiligence]

More musings on the LFB conversion
(my reply to lrgoudy on Yahoo):

>Dew is claiming that the designated director provision was specific to the preferred itself (and thereby tacitly suggesting that the board will no longer have such a seat as a result of the conversion).<

LFB is still entitled to one board seat by virtue of: i) being the sole owner of the Series D preferred stock (note that LFB chose not to convert 115 shares of preferred); and ii) holding a 10%+ equity stake in GTC on an as-converted basis.

>Just why did they convert? May we now expect that by virtue of being plain vanilla stockholders of such a large part of common equity that they will now have a full seat? (…the [existing LFB] designated director was not eligible to sit on committees, which might be relevant to the question.)<

LFB has no contractual right to a “regular” board seat merely by being a large holder of the common shares. (Of course, GTC could nominate someone from LFB for such a seat, but that’s a different matter.)

>Another hypothesis which Dew has plausibly advanced is that the conversion happened so that we would be at liberty to issue more preferred shares in connection with a deal (eg partnering) without needing to get approval from the owners (before the conversion the preferred issuance was near its authorized limit).<

For now, this strikes me as the most plausible explanation for the conversion.