Member Info for h4mmered

i've just done a little digging on the new financing for conduit. it's being provided by nirland ltd, a guernsey-based vehicle controlled by david rowland, banker, financier and friend of prince andrew. nirland also provided $20m of funding at the time of the murphy canyon deal.

david rowland is a man of very substantial resources. that he has chosen to only provide $2.5m now to cdt, and chosen to provide it as secured debt finance, suggests to me that this is a "loan to own". he has very deliberately sought to control the future of the business by putting up as little as possible right now. i assume that he wants to control the business, because he's ****ed at his original $20m investment now being worth $400k.

he can now control the company completely, by virtue of his charge over the assets, and there is not a damn thing the shareholders or the management can do about it, unless a large refinance takes place.

"Realties are that capital security is in place for a further period and a firm relationship established with UL number one pharma and worlds number five. All good."

They have taken out a debt facility, for less than one quarter's burn rate, repayable as soon as an equity funding is completed, at an all in cost of over 100%, and you think "capital security is in place"?

The AZ deal is good news, but can only be taken forward with fresh funding, over and above the $14m required to keep the lights on for a year and $3m to repay the debt. To give the capital necessary to take these drug candidates forward and have "capital security", the company would need to raise c. $30m, vs a $15m current market cap. If you assume a 30% discount for an equity issue, that would imply issuing three new shares for every one existing. This implies that the company will then need to achieve a $350m market cap by January simply to get back to a buck and avoid delisting.

It's a bridging loan, with an obligation for it to be repaid from any equity raise, with at least 75% of any raise used to pay off the loan until it's repaid. Total cost of the funding is over 100%, given that it's a one year loan and 12.5m shares are being issued as a closing fee, equivalent to roughly to the value of the loan, and it buys them less than one quarter's cash runway.

To say it's desperate is a mild understatement - this is a "loan to own" transaction - someone has provided less than $3m and now controls the company through the security it has.

Unless there is a very big fund raise imminently CDT is now officially toast.

If CDT is delisted then Vela retains the shares, they simply can't be realised. However, with the Q1 numbers the company noted that it needed over $14m annually to cover its running expenses, and that would mean on the cash balance as at 31st March it will be pretty much out of cash now. So long before delisting the company will have to file for Chapter 11 protection from its creditors.

So it needs to raise funding, or shareholders are pretty much wiped out. This leaves two alternatives to Chapter 11 - sell off some of the IP to recapitalise the business or do a distressed level equity funding. Either way, current shareholders will end up owning a small part of the current economics of the business. Sale of some of the IP has to be the best way forward for existing shareholders, combined with a substantial cost cutting programme, because an equity raise at current levels would be ridiculously dilutive - the market cap is only $12m, you'd have to do any issue at a big discount and you'd need to raise at least $10m to stabilise the situation.

Never mind what the market cap would be at 0.03p per share; the net tangible assets are now around £3.3m, or just shy of 0.018p. The current discount to NTA of c. 50% is pretty consistent with where it's been for the past year or so. The only difference now is that the £800k of that valuation that is WeShop and Aeristech is now 25% of the valuation, and both are of extremely uncertain value. Combined, the holdings in those two stocks are almost six times the value of Conduit today .

Reverse into Vela would be tricky for two reasons; firstly it would be onto AIM, which is much more onerous than Aquis, and secondly Vela has a bunch of illiquid holdings that would take time to unwind. Explaining for years why a social media company owns a stake in Aeristech would be a millstone round their neck.

There would be no technical reason why WeShop couldn't reverse into WeCap; the reason that they might not want to do it is that they need to persuade stock market investors that the sort of valuation that has been talked about to participants on the platform and implied by the last round of funding is an attractive entry point. Markets in small and mid-caps remain tough and a blue sky play doesn't feel like something that the market wants right now. Unless the company can maintain a high and rising share price the whole thing risks unwinding, because shoppers on their platform will realise that the "value" that they have "earned" is completely uncertain.

However, maybe it's better to reset now, and grow the business as a quoted entity from a lower market cap?

They would need to file an S1 way before listing if they were going for a Nasdaq listing and there's been no sign of that. Given the company's comments in May about being able to trade the stock, it sounded much more like they're more likely to list in London.

I would have thought the obvious thing to do would be to reverse the business into WeCap...gives you a quote simply by issuing a prospectus and you're up and running within weeks.

Mush owns a large stake in WeShop? They own 0.2% of WeCap, which owns about 15% of WeShop.

They did confirm in May that they were still shooting for September, but given the vague nature of the statement only four months before a supposed listing I suspect it will slip https://we.shop/2024/06/24/wshp-community-update-may-2024/

Originally the listing was promised for Q1 23 https://www.cityam.com/shoppers-offered-shares-weshop-races-towards-ipo-as-british-tech-star-launches-worlds-first-community-owned-e-com-platform/

Then it was supposed delayed until later in 23, due to the collapse of SVB https://www.itv.com/news/2023-04-09/weshop-makes-first-share-buyback-payouts-to-shoppers-but-delays-ipo

The price of WeCap (less than a fifth of the putative value of its WeShop stake) would suggest that there is a decent amount of uncertainty as to whether it will list. As and when there is a prospectus, WeCap will have to announce that.

Interesting to see that all the transactions of any size are at or around the offer, suggesting that there is probably more to go yet before the people that took a punt at the beginning of the week cash out. I'm guessing there may be some resistance at the 6-7 level, after the short term traders have doubled their money...

Just looking through the CDT Q1 numbers, they had just over $3m of current assets, as at 31 March and just under $3m of general administration expenses that quarter, so by now the cupboard is pretty bare. I assume that they are trying to find some funding, and that is why the price keeps getting hammered, because the dilution is going to be significant. To get themselves 12 months runway would require a share issue equivalent to about 60% of the current shares in issue, at the current share price. You would need to do the issue at a discount, to give investors some incentive to invest, and so it could easily double the shares in issue, and investors would still be taking the risk of de-listing if the price doesn't recover above $1, which becomes more difficult if the shares in issue are doubled. I'm guessing the management are hoping that they can hold off issuance long enough to see the shorts closing their positions and the shares recovering, but that's quite a risk...

Once CDT has traded below $1 for 30 days it then automatically has a 180 day cure period triggered. During that period the company's shares need to trade above a buck for ten days to "cure" the problem. So, delisting is not imminent, but the clock is ticking and will run out mid-January...

It's a school https://www.linkedin.com/school/eltham-college/

If they issued 100m shares at 1.5p that would be £1.5m; that compares to an expanded market cap of £7m. How would a company with £1.5m cash and no IP be worth £7m?

It says GM is at 9.0%?

LCS Trust holding now 15 million shares https://investors.truspine.org/investors/shareholder-information

Aren't the major shareholders just those listed on the website? You think there are other, undeclared, shareholders?

So, if everyone votes against all resolutions, and all resolutions fail, what happens then?

Who is Mrs Miller and why would she be joining the Board? Is the return of FB really a possibility?