There's an RNS from Toople this morning that gives an update on a private placement and loan repayment:
In May 2016 the loan was £750k, and in May 2017 the amount outstanding was restated as £606,756.
Today's RNS states that the lender (David Breith) has accepted £150,000 repayment in full and final settlement of the loan.
Perhaps I'm missing something here, but why would Mr Breith effectively write off a little over £450k?
Because he believes the company is going bust so would rather have some cash today rather be a creditor owed a larger amount on liquidation
That's a plausible negative interpretation rhomboid and to be fair I cannot think of a positive one.
I can though think of a neutral one, which is simply that Mr Breith (the former director who originally made the loan and has now recouped it with a massive haircut) needs the cash - there's no prospect of the loan becoming formally repayable in the next couple of years and as I read it, I cannot see that the asset (ie the loan due to him) is strong enough that it could be used as collateral for him to borrow against.
On the other hand there is a tentative positive in that other (un-named) investors stumped up £662k in the private placing at around the current share price - from a very superficial look at the numbers this MIGHT be enough to see them through to cash-flow positive trading and profitability.
Not something I would personally want to stake anything on at this stage, but as this is my (former?) sector I might have a bit more of a dig into what they are actually doing and their business model as there is a slight possibility that this is a hidden gem and I have never paid it any attention whatsoever before (in truth I would be much more interested if they were NOT listed.)
Hi Gromley
I've just looked at Toople (LON:TOOP) for the first time and see a lot of positives (rising revenues, increasing gross margins, debt free, etc..).
Everything seems to be moving in the right direction and I imagine when the company asks for more funds from institutions, I expect within the next 12 months, it won't be a problem.
I wondered whether you had managed to do some more digging into the company?
It's not one I would ordinarily buy, and at the current moment I probably won't be buying, but it is certainly going on my watch list, so any insight to go in the notes would be great.
Thanks in advance
Abtan
Hi abtan,
I didn’t look too much further in truth.
Even with an aggressive growth trajectory they are still to far away from profitability to interest me personally yet – of course that might make now just the right time to buy if they do make it big.
They seem to be executing and growing quite well as things stand (growth figures reported today were impressive, although they are adding more overhead costs) – however I don’t see they have necessarily got much of a moat. I may review my thinking on that if stay interested as the story progresses.
A quick amber flag also waved for me reading through the results – there are a number of messy related party transactions with Toople (LON:TOOP) buying services from companies controlled (and owned) by the directors. This is probably all above board, but I would want to understand fully if I were to invest in a tiddler like this.
In particular it wasn’t clear to me if the shareholders of Toople (LON:TOOP) actually own the "Merlin" software platform which is central to the business and possibly the only real “differentiator” they have.
If I was more interested in investing here at this point, it probably would not be to hard to clarify those matters, but in truth as I’m not likely to invest here anytime soon, it hasn’t become a priority for me.
If you are considering investing though that would be the first thing I would suggest clarifying.
Regards,
Tony
(Aka gromley)
