5 ms·
For everyone saying Fortress are idiots: this is a loan and the amount is conditional. That means 2 things: 1) If Theranos fails, Fortress can claim its assets
by ukulele 9y ago
For everyone saying Fortress are idiots: this is a loan and the amount is conditional. That means 2 things:
1) If Theranos fails, Fortress can claim its assets.
2) The money is not released until certain milestones are met.
So either Theranos misses the milestones, folds, and has Fortress take over its assets, OR Theranos meets the milestones and is actually a valuable business.
Depending on the terms, Fortress could have easily structured this deal such that they win in either scenario. I would imagine that Theranos was desperate ("distressed"), so the terms are likely pretty onerous.
- hkmurakami 9y agoI saw that Fortress is getting warrants worth 4% of Theranos so I agree with your arrestment on both scenarios.
- sjg007 9y agoTheir building off of Page Mill is probably worth a lot.
- CalChris 9y agoI'm certain they don't own 1701 Page Mill Rd and in fact, Stanford owned it previously. https://www.bizjournals.com/sanfrancisco/news/2017/01/04/kilroy-realty-krc-theranos-palo-alto-stanford.html https://www.bizjournals.com/sanfrancisco/news/2017/01/04/kil...
- hkmurakami 9y agoThat lot used to house the old WSJ office. Which I find poetic given that the journal was the one that broke the Theranos story.
- tylerlh 9y agoKilroy Realty purchased the property in January along with an adjacent property for $130m. Stanford owns the land and does long term ground leases.
- LolWolf 9y agoStanford continues to own the land—I think they almost exclusively lease it (even if it is long-term).
- hkmurakami 9y agoStanford Research Park https://en.wikipedia.org/wiki/Stanford_Research_Park https://en.wikipedia.org/wiki/Stanford_Research_Park
- DonHopkins 9y agoThe Desk Depot guy in Mountain View is probably chortling and rubbing his hands together in anticipation.
- mathattack 9y agoFortress made a fortune in the MBS market. They aren't experts in biotech, but they are very deep in asset backed loans. This isn't "Let's fund a unicorn" situation, it's "Let's get an above market return on a loan where we can claim assets in excess of principal if it goes belly up" situation. The real question is "What are those assets?" but the investment wouldn't be made if they weren't there.
- unchocked 9y agoThey've got that fly-ass building in Palo Alto, do they own it? Looks to be worth close to $100M right there. (Seeing a basically pre-revenue company build that thing was in retrospect a good tip-off that it was a scam.)
- mathattack 9y agoNaming stadiums and building fancy headquarters can be a tip-off. Look at 3com.