Avid Bioservices Inc (CDMO)

[Fire Fox]

I would have taken down the full 30mm in one tranche. When borrowing it always pays to borrow a little more than you need and conversely, when lending it always pays to lend a little more than your client needs.

RRdog-- I agree that one should borrow a little more than needed, and IMO that is exactly what PPHM has done. The fact that PL insisted on an initial tranche of only $15M, and then thanked the three banks for their accommodation on this point, tells us the Company is VERY sure they will close a BP partnership financing in Sept or Oct.

The only reason the $30M figure is part of the deal is to increase the Company's leverage in the BP talks. If the Company is sure that they are going to accept one of the several BP offers currently on the table during the next 2 months before the EOP2 meeting, than $10M, maybe $15M for good measure, is all they need to have a very flush balance sheet pending receipt of the huge upfront BP royalty payment this fall.

The Company got the best of both worlds: they get to act vis-a-vis the BPs and Wall Street funds as if they have the full $30M, but they only have to pay interest, pre-payment penalty and warrants on half that amount.

IMO, the initial funding at only $15M is a very bullish signal about SK's confidence a BP deal will be closed before the EOP2 meeting.