market folly

MHR Fund Management run by Mark Rachesky recently filed a Form 4 with the SEC in regards to Emisphere Technologies (EMIS). Per the filing, Rachesky's firm received convertible notes on EMIS for reasons we'll discuss below. We see that MHR acquired $1,272,753 worth of convertibles with an exercise price of $3.78 and an exercise date of September 26th, 2012. These convertibles in aggregate represent 336,705 shares of common stock in Emisphere Technologies.

This is not the first time MHR has acquired EMIS convertibles either. Rachesky's firm has owned 11% Senior Secured Convertible Notes since May 16th, 2006. These convertibles have interest "payable in kind semi-annually in arrears through the issuance of the reporting persons of additional convertible notes." As such, MHR has filed this Form 4 with the SEC to disclose the receipt of these additional Convertible Notes as paid-in-kind interest on the notes they already owned. This is also not the only transaction relating to Emisphere for MHR in recent times. As we detailed in June, MHR also acquired warrants on EMIS.

Rachesky received his B.S. in molecular aspects of cancer from the University of Pennsylvania and an M.D. from Stanford University School of Medicine. Additionally, he also holds an MBA from the Stanford Graduate School of Business. Prior to founding MHR Fund Management, Rachesky previously worked as a senior investment officer and managing director to Carl Icahn. While Rachesky was once viewed as Icahn's apprentice, it's intriguing to see them now essentially pitted against one another in a separate position. As we've detailed numerous times before, Icahn has been bidding for Lions Gate Entertainment (LGF), one of MHR Fund Management's largest holdings. We'll continue to watch and see how that one plays out.

Taken from Google Finance, Emisphere Technologies is "a biopharmaceutical company that focuses on a delivery of therapeutic molecules or nutritional supplements using its Eligen Technology".

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