Supreme Cannabis Company Inc. (The) T.FIRE

Debentures or commons....

[Bever73]

Whats the play here folks....time is running short.....

[BCmountainman]

will tell you what  the play is getb out lol

[johnale]

Mathematically - it's debentures. 5k in debentures at .31 gets you:  - 16000 debs  by sept 1  10160 debs will convert to 18656 fire (1/2 4mth hold)  5840 debs remain - can convert to 20480 (if you want) fire total: 39136 shares fire  5k in fire at .19 nets: 26315 shares fire  To be honest - I've been cleaning up debs between 29-31. 

[BCmountainman]

You keep averaging down

[Bever73]

John in your example...2nd part....remaining 5840....how do you convert to 20480 shares ?? quote=johnale] Mathematically - it's debentures. 5k in debentures at .31 gets you:  - 16000 debs  by sept 1  10160 debs will convert to 18656 fire (1/2 4mth hold)  5840 debs remain - can convert to 20480 (if you want) fire total: 39136 shares fire  5k in fire at

[johnale]

36.5mil converts at 28.5 cents - 128mil shares  128/36.5 = 3.5068 for every 1 fire.db get 3.5 fire shares.  5840*3.5068 = 20480 fire shares.  now considering you get 8% cash payment on those shares - makes sense to keep the debs and get that interest until you want to sell. I assume after the deal fire.db and fire should even out. 

[BCmountainman]

So let me get this straight, you want people to buy there debt instead of their shares so wht you are saying is that as long as this company does not make a cent and keeps going into debt thats ok with you right.

[Method]

I'm happy to see all of this positive debenture talk. I also increased my position by a decent amount at 29.  John, if you don't mind but what did you mean by "after the deal fire.db and fire should even out"?

[johnale]

Method - Obviously there is a discount on the debenture - as you said because of the short borrow.  after the shares are distributed - and debs are left with 36.5mil which can be converted to 28.5 fire -   if fire trades at .20 - debs should trade around 70. (As you alluded to as well)  there shouldn't be that huge discount because you could just instantly convert

[Method]

I agree, that makes sense. It really should trade at a premium to that but probably needs retail to be savvy to it. Although, it's not a terrible thing if they get arbed away as it will make the credit better for those remaining. So another way to think about it as I think you have alluded to is that 70% on the 36.5 should be worth 25.5 of the 31 we are paying now for the FIRE.DB. The

[WealthBuilder99]

Hi Method & John, One thing I wanted to point out regarding the debt. Re-read the news release and you'll notice the new series of debentures "will not be listed" therefore they will show no value, not that that matters if you plan to hold until conversion, which I do. I wanted to ask you two, regarding your comment, "the arb exists because of the short borrow"

[johnale]

The way I read it - and I'll leave method to have the final say bc he's the resident debenture expert - is that it's only on the accreted portion - will be evidenced by a seperate debenture that won't trade.  Release says interest payment reduced to 2.9mil - so there is a 8% cash payment made.  3% will be accreted into a new debenture and not be able to convert to

[Method]

I agree with John on the first question. The debentures that won't trade are seperate from the $36.5m in debentures that will trade. I'm sure MM will value that at par so I don't see why you can't.  On the second question, the borrow on FIRE shares is very high based on a number of factors so if one wants to hedge the converts they have to pay significant amount of interest

[watchmeplz]

Nice method. Can you join me in some other equities? lets make some money together and not get stuck on this bag. 

[Method]

What else do you own? Most of the stuff I own is hated as much as you hate this name.

[WealthBuilder99]

Very helpful. Thank you for taking the time to explain.  Is there any evidence MMCap is actually hedging their position to a large extent. I can only find short interest information of around 10m shares, which is fairly low, considering how large their position would be. I recall they had bought $80m, if I am not mistaken. Refering back to the press release: "The total principal

[Method]

We don't know how hedged MMCap is unfortunately. I'm not even sure they keep their filings up to date. On the second point, the accreting amount is not cash interest which is why I think they highlighted the cash interest was down to $2.9m from $6m on the debentures and separately discussed the accretion rate of 11.06%. Basically, the remaining debentures in three years will have $36

[brentkosta]

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[BCmountainman]

MMCap + Greed+Profits= Crimmals

[johnale]

So if I get this straight -  36.5 mil will accrete at 11.06%/yr and one will get a seperate debenture to show this amount. (Non cash)  36.5mil will also pay 8% cash - semi annually. Starting sept 1.  the accreted portion will start being paid back in cash - but only after 3yrs from sept 1. 

[Method]

  actually the accreted portion and the original $36.5m will be paid off in concert at 1% of the total amount ($500k/month or 1% as noted in the press release) for two years before the rest is due in 5 years, presuming they aren't converted to stock by then.   

[WealthBuilder99]

I suppose we will know soon as MMCap will show up as a  >10% shareholder on SEDI filings upon conversion I see what you are saying, so upon the first conversion  there will essentially be two series of debentures, the principle and accreted portion (non-listed). How do you calculate 13.5m? I get more like $12m So the only way to cash out of the accreted portion will be at maturity

[johnale]

Ya I get more like 12mil as well.  but essentially - doing some more math -  at 31 for the debs:  On 36.5% of any debs investment you will get: 25.8% cash return/yr  35.7% deb return/yr  61.5% return total/yr  on 63.5%  get fire shares with a face value of 17.6 cents  sheeeeeeeeeeeeeeeeeeshhhhhhhhhhhhhhhhh  can I buy some more

[Method]

It is definitely complicated and the press release wasn't clear. There should be documents filed before its effective on  SEDAR. The accretion amounts is compounded annually so calculate 36.5 * (1.1106^3) - 36.5 and you get the $13.5 accreted convert. 

[brentkosta]

This post has been removed in accordance with Community Policy

[johnale]

It's 8% of the face value. So buying at 31 - the effective interest rate (on the 36.5mil left) is 25.8%!!!