I am surprised that there have not been more comments on the recent addition of Laura McCormally to the TAAT team and what this may portend for TAAT and the investment community. While it is certainly nothing more than fun speculation on my part, I have thought about the following;
A. Merger – highly unlikely with big tobacco (BT) for two reasons
1. BT will be resistant to such a move because of the recent failure to move away from their core competency (Altria / JUUL).
2. TAAT is not interested in a buyout/merger with BT
B. Merger – with a company which has the production capacity and facilities to move entirely to TAAT production with TAAT retaining controlling interest
C. Acquisition – of a company which has the production capacity and facilities to meet TAAT projected production requirements in the US ... I consider this to be more likely than A or B
D. Financing required to fund construction of a new production facility ... this is my personal preference only because TAAT is new and evolutionary in concept and so deserves new and evolutionary production technology (and yes, cost may be prohibitive but I still like this one the best)
E. Capital Markets – PP, Venture Capital, Joint Venture (JV) and/or bank instrument (capital / equity)
1. because B, C and D above will all require mucho capital
2. TAAT will require capital for expansion regardless of the vehicle they choose for expansion
3. Funding construction of a new production facility will probably need to be arranged through the Capital Markets in one form or another (the PMI plant in NC sold for $68.5 m, very likely at a heavy discount since it had been dormant for 5 years at time of sale, but still gives some idea of the capital requirement)
I think the addition of Laura McCormally signals the beginning of an impending TAAT foray into the Capital Markets to fund the TAAT expansion strategy and execution plan in the US. This could include any one or a combination of B, C and D being funded by one or a combination of capital sources defined in E. I have been of the belief that TAAT needs a lot more production capacity and Setti has said more than once that TAAT needs more production capacity. In order to scale up to meet this added capacity requirement TAAT will need an infusion of capital far beyond what current potential sales revenue will provide and beyond what the exercise of warrants will generate. Enter Laura McCormally.
Just some food for thought.
Cheers!
