The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Got to agree with Spratt on this. I’ve invested in many companies over the years who have brought out an RNS confirming a new financial facility following a period of (obvious) discussion. Whoever they choose to talk to, you’d expect the discussions to be kept private until a deal is struck.
I really don’t see any issues to RG being the discussion party, should that happen. He’s already the largest shareholder and clearly likes the company so he should be supportive.
In their earlier update, the company advised an expectation of sharply increasing sales as the year progresses. Results from other companies show there’s a tech rebound out there, I expect CRTA to gain from this as well. It seems to me it’s all to play for out there and with such a top notch management team in place we surely have at least a fighting chance of the turnaround taking place. I thoroughly expect a major rerate of the shares soon as the recovery starts to become clearer. Arranging some sort of facility just seems prudent alongside everything else going on.
I’m buying more accordingly. If a soft facility is announced the shares will rocket.
What I meant is that I think CRTA have invited RG to discuss providing a soft facility to them as it will be mutually beneficial. After all, they have no idea for sure that the year will work out, it is all based on hope and a range of assumptions. We hope most of these are reasonable ones, and that the company can trade through to a successful outcome, but it is perfectly wise for them to plan a facility in case of any issues. The biggest shareholder is an obvious choice, especially if he's on side.
And here's the conundrum - RG has not bought more for a while, yet previously he was regularly increasing his stake. So what is stopping him given the price is near all time lows? I think he has entered into these discussions and the books have had to be opened up to him as a result. Such discussions normally exclude the involved parties from increasing their stakes during such discussions. Hence the obvious silence from RG.
When I commented that the penny was starting to drop, what I meant here was that a number of buyers began buying in and buys do exceed sells over the last few days. Nothing special yet, everyone's assessing things and forming their own opinions. These are mine, they may be wrong, but I am an investor with decades of experience, and I believe such discussions would be a logical move by both parties at this stage, so why not?
Where is Richard Griffiths? Before the recent update, he was frequently seen increasing his stake, since then the price has tumbled and he is nowhere to be seen. What is going on?
This is only my conjecture, and perhaps I am wrong, but I think he has been asked to assist with any funding and has obviously then asked to see the books. In such a position, he cannot increase his stake.
He could easily provide a soft facility to CRTA secured perhaps against a building etc, and provide any liquidity they need. For him, the sorts of money involved needed to probably see CRTA through are small, so the facility need not be large.
It's all a question of course as to how well business is coming through, but one has to plan for contingencies, even worst case ones, and it would seem wise to bring him in, if he is amenable. Given his current 20%+ shareholding, I'd guess he would be pretty amenable to helping.
More to the point, news of a decent facility - which CRTA might never need to use - would enormously aid the share price. Friendly large shareholders can be worth their weight in gold......
I thoroughly expect the shares to nudge the 400p level imminently now and break through within the next few days. No reason now to hold back the shares. And, there's the increased chance of Frasers now making an opportunistic bid before the recovery becomes too obvious.
These analysts should be publicly flogged until they get their Companies to buy the shares they are so endlessly promoting. If it all means nothing, then sack the whole lot of them.
Not that I'm known for my strong views, of course.
Chumba, I think you'll find someone sold in anticipation of the Iran / Israel situation blowing up over the weekend.
We may open up tomorrow as this crisis would appear to now be over - unless either side decide to 'retaliate'. But Iran has said to the UN that the matter is now closed so I think we may get a bit of a relief rally tomorrow.
Starting to have buyers coming in back in I see. It clearly takes a while for analysts to put all the new data through their computer programmes. This is well oversold, I expect a bounce back to 70p+ level soon, within next few weeks.
It's clear from the update that now is the bottom, it is then the obvious [and rare] time to get in on such a tech company. You really don't often get such an opportunity with tech companies, I expect a range of investors to slowly pour in as this becomes more obvious.
Continuing adjusted EBITDA of £120.4m (+6.1% margin), vs. January 2024 guidance of above £117.0m
Group adjusted EBITDA £114.1m, +78% YoY (FY 2022: £64.1m)
Free cash flow breakeven achieved
Strong balance sheet, with c.£600m of cash and facilities
Q4 2023 Group revenue growth (+1.1%) accelerated in Q1 2024, Group guidance unchanged
Meistermeister, there's more than one way to deal with their issues. A rights issue is one, but it would be too dilutive at the current level.
What's far more likely to happen, in my view, is that a deal is struck with Richard Griffiths for a soft loan facility. No doubt it would be a win win situation for both parties - after all, it is worries over their longer term funding that is keeping a lid on the share price but this could be resolved with a fairly simple facility - especially as they have no other bank loans.
I would imagine the shares would soar on the news of such a facility.............
Makes you wonder what is being negotiated behind the scenes...........
According to last week's update, FY24 cash cost base is circa $23m and management expects to deliver FY24 bookings performance within the range of $13m to $15m. This was confirmed again this morning.
On the other hand it hardly takes a genius to work out that if the cost base is $23m and the bookings are $15m then there will be a $8m shortfall.
Management meanwhile maintains its aspiration to exit FY24 at cashflow breakeven and now reports a cash position of $13.3m as at the end of March 2024.
The firm currently employs 112 employees as at 31st Dec 2023 - it looks to me like that is going to have to drop a bit more to around 90 perhaps, meanwhile they are burning through cash at around $4m a quarter. With USD 13.3m left, that gives them until the end of 2024 to turn the ship around [i.e. enough for three more quarters]. That also of course assumes no revenue which is no plausible - any revenue made over the next three quarters must aid the cash position.
Getting in now is clearly right at the bottom of things, and it is a straight choice - do you think they are going to run out of money and need to raise funds before the end of the year, or will business improve to such a degree that the operation becomes self funding? As Mr Kelly advises today, there's been strong contract growth, and as last week's announcement advised, the growth will not be linear, more like a J curve.
The company currently has no bank loans, and a wealthy prominent large shareholder in Richard Griffiths. I am sure a favourable deal can be done with him if necessary, but frankly, I don't even think it will be necessary. This company is now set up for growth - I think it will deliver and have bought more today accordingly.
In time I suspect this may be my best performer in my portfolio.