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This is certainly an interesting development. When I last posted it was to detail an email exchange I had with Callum about financing. To summarise, CHILL continues to be cashflow negative and requires further financing to support growth. Recently, Mr. Swann has been the major source of financing form the company and, as well as being the largest shareholder, I think is also the largest provider of debt financing. I further asked Callum about the relationship he has with Mr. Swann and I received the following comment - "Turning to your question about our relationship with Mr. Swann, it is fair to say that he is extremely supportive of the Company and our vision. I am in regular contact with him, but that is equally true of many shareholders. I am an open book and try to make myself as available as possible such that any investor can reach out to me with questions or concerns. To be clear, though, Mr Swann does not exert any control over our strategic direction or our day-to-day operations. He is a supportive investor, but all decision-making remains with myself and the Board.
It looks like that relationship with the Board and the fact that "Mr. Swann does not exert any control over our strategic direction" has changed.
i thought i would gain more traction by going to callum directly. i asked him, as a significant shareholder and via email, about the financing of his growth strategy. he replied very efficiently with the following:
thank you for your email and for your continued interest in chill. i understand your reasonable concerns around the funding of our growth strategy and i'm more than happy to provide clarity where i can.
first and foremost, we are an early-stage business and, as i've mentioned in interviews and investor meetings, there are clearly costs associated with setting up distribution channels for consumer products like ours. with that being said, having signed and resourced our first set of major retail deals we are starting to see our cash flow burden ease up as we receive funds for the sale of products. at this stage, any significant 'step up' in our capital requirement is likely to come from the need for an increasing quantity of products to sell into deals with new retail partners.
fortunately, there are multiple ways to go about sourcing funds that are to be used for inventory acquisition and we currently exploring a number of options including invoice factoring facilities and other similar solutions. although the company has traditionally met its capital requirements through equity raises, they are not the only tool in our ****nal and, having very recently raised additional capital, we are certainly not looking at this route again for now.
turning to your question about our relationship with mr. swann, it is fair to say that he is extremely supportive of the company and our vision. i am in regular contact with him, but that is equally true of many shareholders. i am an open book and try to make myself as available as possible such that any investor can reach out to me with questions or concerns. to be clear, though, mr swann does not exert any control over our strategic direction or our day-to-day operations. he is a supportive investor, but all decision-making remains with myself and the board.
finally, i want to clarify that our movement towards a new pod system (both rechargeable and refillable) vaping device does not come at an enormous cost. this was a direction we were heading towards and planning for long before the government's policy announcements at the end of january. it is not so much a pivot, but rather an expansion of our product range albeit one that does not come with a large r&d price tag attached.
i hope this helps.
OK. Maybe the less emotional, detached approach is not for you. That is OK as long as you are aware of this and you can tailor your investment approach accordingly. My advice is to diversify as then the ups and downs won't be as painful. If you enjoy the emotional roller coaster then you should also try the lottery, bingo or even betting on the horses.
Mr. Pigeon,
You seem to be struggling so I am going to help you out.
One of the things I have learnt over the many years of investments is to not take things personally. This allows you to be less emotional and take detached, more informative investment decisions. So when someone posts something challenging current thinking around future financing you can maybe, take a step back, and think "Yes. Interesting point. I'll challenge Callum on this ." As opposed to mindlessly typing out Troll, DYOR.
So remember, keep saying to yourself " don't take things personally ", "don't take things personally ".
Keep trying this and you'll get there.
Good luck.
Mr. Pigeon,
I am sorry to be the one to tell you this but the number of posts you write does not reflect investment acumen. Then again, based on your input, there maybe an inverse relationship. Take another read at what I posted and you will see all is factually correct.
Just because someone highlights issues does not indicate a troll, it is called taking a balanced view. Also, if you read the release by CHLL in Jan you will realise the £2.6m is not all new financing - £1.3m capitalises existing debt. I am trying to highlight that it costs money to grow and pivot and I am unsure where this will now come from.
Share price performance:-
1 week = -6%
1 mth = -36%
6 mths = -51%
1 yr = -31%
5yrs = -80%
Since IPO = - 77%
Short term performance - not great. Long term performance - not great. This is the reality of when the SP is near the all time low. This brings me to the major issue - where does CHLL get financing from? SP at this level probably rules out another share issue but Callum also indicated on the call that company is not yet cashflow positive and is unlikely to be in the immediate future. My concern is how to finance the growth ?
Big question now is how will they finance the 'pivot' as Callum called it. Can't do another placing given one was done 3 days ago at 3.5p and share price dow a lot since then. Maybe Mr. Swann stumps up again but I suspect he will want a higher rate than 2% per month . Maybe the current sales are cashflow positive but , as yet, we don't know if they are delivering a profit - we have seen some revenue numbers but no feel for profit. The share price has moved down a lot so this seems to be factored in.
The key point is that if the shares in issue go from around 300m to 450m and the 150m of new shares are issued at a price of 2p when the market value at the time of issuance is 4p then you will get a fall in price ! Just basic maths.
It's important to think of the RNS from a number of perspectives.
From the company's perspective it is positive as it doesn't have the £3m hard liability due in May 2024 hanging over it and it saves £300k p.a. from the 10% interest on the convertible loan note.
From the perspective of the shareholder, despite it being well flagged, it is a negative due to the dilution factor but, and this is the reason for the share price fall, it is important to look at it from the perspective of the investor who lent CHLL the £3m in April 22. They received 10% interest from May 2023 to end of November 2023 (so £150k) and they will now look to recoup some / maybe all of their initial outlay. So they can theoretically sell 100m of their 150m newly converted shares at 3p a share to recoup their £3m outlfow and they still have 50m extra shares to gain in any potential upside. I suppose we may find out who this is when the shares convert as the major shareholders published will change.
Fair point. I was just trying to highlight why the share price has remained quite subdued despite the recent positive RNS announcements. The possibility of share dilution or a £3m payment might explain some of this.
Don't forget that the share price will be capped by the fact that there are over 150m of convertible bonds that will convert to equity if Chill produces a prospectus and if they don't by 31st May 2024 they have a debt repayment of over £3m. There is also another 20m of convertibles that are convertible to shares at a price of 8p.