Supreme Cannabis Company Inc. (The) T.FIRE

jmo, I don't see any pot company taking over any other one.

[jpm59]

why would they? what are you actually buying, just more pot & debt. They all have debt and the market place has plenty of pot. If a company falls on hardtimes , you need a financial reason to "buy " them.(control the market) In this market  you need less suppliers, so let any of them go broke, get rid of a competitor.Supreme will be fine, they always lagged behing the big boys & was always compared to them. But the big boys got too big & someothers just didn't "produce" good quality, just a game. Supreme just needs to show sales & control expenses.The debt that is due next year is a whole new ball game,,deal with it then!

[Method]

You buy them because the head office synergies might make it financially accretive.  If they cannot refinance the debt, it might be the best option. That being said you can make 4x your money on FIRE.DB plus interest just as long as they don't go bankrupt and are able to pay the debt off even if the stock is lower by then.

[SERIOUSasCOVID]

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[risingstars]

Why do you think that they might be not be able to refinance the debt? I would not understand that in the current situation. We know that all companies currently have to save money. It is everywhere in the media that there is a booming cannabis market and the sales in the markets are extremely increasing. I'm actually convinced they'll make money soon. FIRE is for me

[Method]

  The bonds trade at 25. Clearly the consensus view is that FIRE won't be able to refinance the debt. i hope that view is wrong but if I can make 400%+ return, if they are able to refinance or a 300% return if the debentures get equitized and the current market cap is unchanged (with a lot more shares outstanding). That is just a better risk reward than buying the equity. 

[johnale]

Ya but the debt could also be rolled over for additional term - in which case your not getting a return "potentially"  additionally your "safe scenario" for debentures and poor equity outcome is if supreme is equitizing the debenture at .30 cents a share creating massive dilution. (or whatever price) the share price would crater anyways and you would not be selling at

[Method]

  It's not their choice what price the shares convert to equity. It's also not their choice whether the debentures get rolled. A hedge fund owns ~80% of the debentures so it will likely be up to them to negotiate with management directly.  Meanwhile, the company filed a $75m shelf last night to prepare.  I'm not saying the common won't work out but the

[johnale]

OK ya I see the logic. Especially considering the company is looking to pay cash to close the debenture.  there is a dilutive risk if the path they take requires additional capital.    Doing this ahead of time hopefully gives them some negotiating power - and for the hedge fund to continue to receive 6% return - assuming the health of the buisness is sound - then rolling over the

[Method]

Bonds are trading at 25 on the ATS's so the bid/ask spread doesn't reflect the real spread. The shelf filing is constructive for the debentures and not so much for the equity from my perspective. Why not sell the common to buy the debentures as long as you are a long time investor. I get it if you are flipping for a few pennies that you need the liquidity in the stock but otherwise no

[johnale]

well I think there are a 2 scenarios where the debentures wont get you the best return.  most bullish scenario and the roll over scenario.  There is also a wash scenario where minor dilution is required and debentures are made whole.  I think completely cratering the equity to pay off the debt is an unlikely scenario - given their cash position, and 19 month runway to maturity

[Method]

Actually the runway is 3 months shorter. If they don't find a way to clear out the debentures before July 2021 that the banks approve, they will lose the bank line too. I hope they put up a great quarter but if they do and the equity starts to lift, they will almost definitely  try to raise some capital using the shelf. Hopefully for both of our sakes, they use the equity raise to buy

[johnale]

your still 14mths away from july - and a lot of these issues are mute if they start making cash.  your talking about 4.5 quarters from now.... and not including operations from q3.  Thats significant.  Buying back converts at a discount to par is a no brainer - but not necessary for some time because its all debt at this point and interest bearing.  I would like to see them

[Method]

I hope your analysis is correct. Thank you for the civil discussion. Hard to find on most of the boards I contribute to. Gentlemen's bet on performance of the shares vs the debentures starting from today's closing prices up to the maturity of the debentures? FIRE closed at 24 cents and the FIRE.DB closed at 25 so it should easy to keep track of.  

[johnale]

Ya no problem - thanks for discussion/strategy session.  In the end I think if your long the company - having a bit of both is probably not a bad way to play it.  mitigate some risk but still can take advantage of the bull scenario if the equity takes off.  but ya I'll take the gentleman's bet - that the share price will appreciate more than the debentures by

[Method]

Total return to keep it honest! The 25% current yield ain't nothing to sneeze at.

[Method]

I am getting crushed on this bet so far!  Amazing the equity market cap is up $35m in the past two days while the capitalization of the FIRE.DB is only $25m (still!).  ~80% of these bonds are owned by one hedge fund so the market cap of the float is only ~$5m. It won't take a lot to move the quote but clearly the sellers of the FIRE.DB still need liquidity.  Of course, the

[johnale]

There is a little bit of a logical discrepancy in the statement: "that being said you can make 4x your money on FIRE.DB plus interest just as long as they don't go bankrupt and are able to pay the debt off even if the stock is lower by then." If..... fire is able to pay their debt - then that means cashflow will be of sufficient quantity to support the pay-back of 100mil then.

[Method]

  I hope you are right, they get free cash flow positive and are able to refinance the debt . The market currently doesn't believe they will be able to. If they aren't able to, they will dilute the equity. Why not own the debentures instead and have a higher probability of making money?  

[OptGreen]

The market today doesn't think any in the sector are going to survive by your logic Meth, the market, SP says nothing today but that the sector needs to retool/ restucture and produce quality not quantity...and now with Corona on top of that. There is a reason why the right-sizing is basically the template of Supreme's operations and almost from top to bottom. Your therory of failure and