News about the sector keeps coming, even if financial statements aren’t.
Late last week saw Supreme ($FIRE) accelerate a tranche of debentures by repricing them, and offering compensation to debt holders for doing so. Half of the issuance becomes immediately tradable as well. Eep:
The lack of uptake on $FIRE’s ATM program probably helped prompt this, as the ATM program was enacted to provide much more cash that it did – raising only $3MM of an asked for $10MM.
That debt-holders interest payments are consuming scarce cash, this is one of the ways a company can accelerate and effectively ‘cancel’ debt. It’s typically determined by the contract governing the debenture, and in this case, it’s a sign that they are coming to grips with their cash reality. Remaining principal accretion of the debentures won’t be paid in cash or shares either: the accretion will accumulate in a separate debenture to be issued on the due date – which was extended by a few years.
I’ve got them north of 500MM shares outstanding now, and whatever that new CPG CEO is doing…. one would hope it’s increasing sales and that they’re doing a lot of it. This debt acceleration has a bit of a $ZENA feel to it, inasmuch as $FIRE’s options are becoming limited. From what I’ve been hearing, there’s grow-ops coming on sale in several provinces, and there’s been little interest in assets. Anecdotal….but it’s what is being talked about out there.
1933 Industries ($TGIF) has never lacked in keeping my interest. Their recent meeting with debt holders in a figurative alley might have freed up some cashflow, but leverage and operational mis-steps have seen this company flounder along for many quarters now.
In a move repeated previously, a $TGIF CEO was appointed to the Board (founder Braden Sutton pulled the same thing awhile back), only to leave later that year. Given it was only in June that the new CEO was appointed and Sutton quietly shown the door, what caught my eye was a change in tone by management in acknowledging that the business itself (ahem) might need some tweaking:
This is the first time I’ve seen this outfit even acknowledge that they aren’t ‘best-in-class’ in everything. For long-suffering shareholders, here’s hoping an honest to goodness gut check is run straight through this outfit. Seems a little late in the day to myself….but hey…there’s always hope, right? With capital firms advising them, ‘hope’ will be the front and centre sales pitch coming out from them for awhile.
Notable: CEO Rosen has a position in $TGIF, which he took up in early 2019 in a private placement. Here we see another creditor ‘take charge’ of an outfit, reminding me of Sonny Newman – CEO of $CXXI.
The preceding is the opinion of the author, and is in no way intended to be a recommendation to buy or sell any security or derivative. The author holds no position in $FIRE, or $TGIF
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