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ЕЛН Message Board

  • guess_the_unknown guess_the_unknown Dec 28, 2004 7:57 AM Flag

    Write-off 14M$ (I hope not)?

    Does this transaction mean that ELN has to write off 14M$? 44M$ accrued value - 26M$ - 1.2M x 3.40$ = 14M$.

    Thanks for clarifying whoever has a better understanding than I do on this.

    "Under terms of the new agreement, Emisphere will pay Elan a total of $26 million cash and up to 1.2 million shares of common stock in installments through June 30, 2005. The current accrued value of the note is approximately $44 million."

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    • Whether eln has a write off or a profit on this transaction depends upon:
      1. The fair present value of the consideration to be received, MINUS
      2. The book value of the note receivable on eln's books.

      That note may have been written down as an "impaired" asset, and/or a portion of the note may have been reserved in an allowance for uncollectables.

      In either event, since eln was required to record valuation allowances or impairement charges to the 1999 zero coupon note, I doubt that any gain or loss on today's transaction will be more than 3 million, an amount not material to eln's financial statements.

    • The PR has the following imply meaning IMO.

      1. Eln and Emis had a joint venture back in 1996.
      2. Emis bought Eln out in 1999 for $20m zero coupon, maturing in 2006 with maturing value at $55m.
      3. In the mean time (like today), this zero coupon note is valued at $44m.
      4. Emis wants to replaced it with $26m cash and 1.2m shares of Emis stock but paid in installments through June 2005.

      Hope this clears it up for you. There is no write down of anything whatsoever.