Replies to post #19039 on GTC Biotherapeutics (fka GTCB)

[DewDiligence]

Re: How LFB will proceed

That's part of the distinction between "preferred" and "common" stock, right? I noticed in the PR that LFB gets preferred stock, not common, which puts them at the head of the line to garner benefits should GTC go under.

I don’t think LFB’s Plan A is to attempt to acquire GTC’s assets in bankruptcy proceedings, and hence the fact that LFB’s convertible preferred stock has a liquidation preference relative to the common stock is not really the issue, IMO.

If LFB wants to acquire all of GTC, the vehicle for accomplishing this will presumably be a standard tender offer. Given that LFB will own almost 70% of GTC’s equity on a fully-diluted basis when the latest financing transaction closes, if 2/3 of GTC’s minority shareholders were to tender their shares, LFB’s equity stake would reach 90%, which is the legal threshold for a short-form merger that becomes a fait accompli without requiring a shareholder vote.

If GTC’s BoD tried to interfere with LFB’s tender offer, LFB could replace a majority of the directors with its own slate—or simply threaten to do so, which would likely be just as effective.