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CryoLife Inc. Message Board

  • dlhild Feb 13, 2010 10:58 AM Flag

    Point #1 - Contract has a 4 year life...

    As I understand the contract, although I have never seen it, the contract has a fixed 6 year life with 4 years 2 months remaining.

    Medafor could terminate the contract earlier, but may have to then pay contractual damages. To terminate now would be a huge mistake for Medafor, because the damages would be beyond our current ability to pay.

    However, to terminate 12 to 18 months early may be worth doing even if damages had to be paid. Medafor may do this if the relationship is still sour. Damages can be calculated using the required contract purchases times gross margins etc. At that time Medafor would have the money to pay damages, even if they were granted. So the contract term could proably be cut back by 1 year, perhaps even up to 18 months.

    Conclusion: At most this contract runs until April 2014, unless amended. CRY is sitting on an earnings time bomb.

10.07+0.09(+0.90%)Mar 27 4:02 PMEDT