Back in December, Quintessential Capital Management (QCM) and Hindenburg Research released a scathing investigatory report on Aphria’s (TSE: APHA)(NYSE: APHA) which called into question most of their LATAM acquisitions.
At the time, the company’s stock dropped around 50 percent and the company quickly became the black sheep of the Canadian cannabis industry. Over time, however, the relative confidence people had in these short-seller reports started to become undermined, as third-party investigations have called some of the details in these reports inaccurate. Today, a special independent committee appointed by Aphria management concluded that the company’s LATAM acquisitions were mostly in order.
Independent financial advisors from Duff & Phelps Canada Ltd, forensic advisors from Deloitte LLP, and legal advisors from Lenczner Slaght Royce Smith Griffin were all enlisted for the investigation. Overall, the findings found that these LATAM assets were largely legitimate, although many were overpriced.
“The Board and I are grateful for the Special Committee’s diligence and independence in undertaking its review. The constructive conclusion to this long process has strengthened the Company,” said Irwin D. Simon, Aphria’s independent Board Chair. “Though I was not part of Aphria at the time of the LATAM acquisition, the Special Committee’s findings give me and the Board full confidence that it was executed at an acceptable value and is consistent with the Company’s international growth strategy.”
However, the independent committee did have a few recommendations for the company. Most significantly, this includes better practices for managing potential conflicts of interest as well as disclosing ownership well in advance so that potential issues like these don’t crop up again.
“With this behind us, we are committed to fully focus on our bright future and creating value for all Aphria shareholders,” added Simon. “Aphria is committed to the highest levels of governance and transparency, with a Board that, upon the appointment of a permanent CEO, will be fully composed of independent directors, from a majority previously. I’m optimistic that the Special Committee’s further recommendations for improving our corporate governance will serve us well in the future.”
Another independent investigation concerning QCM/Hindenburg claims made against Liberty Health Sciences (CNSX: LHS) went on to say that the short sellers’ claims were largely exaggerated. In response to these comments, Hindenburg Research retweeted a comment from QCM, which applauded the independent report for taking the matter seriously. When asked about how they original felt the stock price should be at $0, QCM responded by saying that “Yes, with a “predatory” management in place the stock was a zero in my opinion. With new management in place there is hope.”
In response to the news, Aphria shares increased around 5.3 percent today and many investors are now expecting this scandal to conclude itself as the company moves on.
Aphria Inc Company Profile
Aphria is a leading global cannabis company driven by an unrelenting commitment to our people, product quality and innovation. Headquartered in Leamington, Ontario – the greenhouse capital of Canada – Aphria has been setting the standard for the low-cost production of safe, clean and pure pharmaceutical-grade cannabis at scale, grown in the most natural conditions possible.
Focusing on untapped opportunities and backed by the latest technologies, Aphria is committed to bringing breakthrough innovation to the global cannabis market. The Company’s portfolio of brands is grounded in expertly-researched consumer insights designed to meet the needs of every consumer segment. Rooted in our founders’ multi-generational expertise in commercial agriculture, Aphria drives sustainable long-term shareholder value through a diversified approach to innovation, strategic partnerships and global expansion, with a presence in more than 10 countries across 5 continents. –Aphria