Replies to post #332681 on Avid Bioservices Inc (CDMO)

[westjtter]

Agree...the trading smells of an upcoming financing, however not long ago, Stephanie confirmed that there are no plans to raise funds....I suppose this could have changed in the last month?

To take out the preferred would be about $41 mil in some alternate financing at a lower interest rate(not sure what kind of rate they could get)...or 5.7 million common shares(plus or minus)created by this conversion which would be quite dilutive possibly.

I would think the timing of taking out the Preferred would be a factor of their current margins....Why take out your 10.5% interest payment when your gross margins, or even free cash flow is greater than that number...you are better off using excess funds for expansion to increase revenues and consequently return greater than 10.5% to the company. Assuming of course that expansion would directly result in greater revenues and therefore greater cash flow and margins. Its all about the math....and if you owe some money, it is much better owing it to your own family rather than to a foreign entity...right? (Japan is a great example)

I do agree however that if this were a buyout situation, the acquiring entity would no doubt prefer to retire this Preferred debt with either their own cash or some kind of funding instrument at rates far below 10.5%

The markets may be volatile in the next few months and so no doubt we will be sloshed back and forth also, but I also think within the next few months, we could get some pretty decent contract news.

[eastcoastguy]

Jake, though you might be right I think it's too early for a capital raise. If they are projecting a profitable Q with improving margins in the next 12 months it would make more sense to wait until then. We have available capacity already paid for, cash in the bank and the burn rate is modest. Much better to let the low float push the stock to 10-15 before doing any raise.

I think we are seeing the market makers trying to free some stock up and at the same time swing trade long/short. Look at the chart after the September CC. Stock get's pushed up and then settles back. Similar pattern after our December reporting. Our recent RSI was 86 and though I thought it was a good call I wouldn't be popping bubbly to celebrate. More likely stock is tightly held and to free up stock we'll see these pushes both up and down.

wishing all a healthy, Happy New Year!

eastcoastguy