Aphria shares gain after pot grower reveals CEO is stepping down
13 January, 2019, 23:30 | Author: Eric Barnett
The company was hit with a devastating short report late a year ago as Hindenburg Research alleged that its global acquisitions were highly questionable. The company says CEO Vic Neufeld and co-founder Cole Cacciavillani will transition out of their executive positions over the next few months, according to a press release.
"Building and leading a Company like Aphria, which exploded from an idea in late 2013 to our many successes to-date, has been an incredible journey, despite the toll it has taken on health, family and personal priorities". The Canadian-based marijuana grower said Mr. Neufeld will leave in the coming months, sending its shares down 2.4% to $6.42.
The leadership transition comes after short sellers Hindenburg Research and Quintessential Capital Management sparked a plunge in Aphria's shares after alleging the company sold assets at inflated prices to insiders.
An unverified tweet from Quintessential Capital Management (QCM) posted shortly after Aphria announced Neufeld's departure said that it "welcome [s] the latest executive changes at Aphria which clearly vindicate our short thesis".
But after a rocket-like ascent, Aphria became mired in controversy at the start of December, when a damning report by a short seller made the company's stock plummet. However, QCM didn't respond to BNN Bloomberg's inquiries to verify if the hedge fund had fully withdrawn its short position on the company.
Aphria is also the target of a proposed C$2.8 billion hostile takeover bid by Green Growth Brands Inc., which has raised further questions about connections between the two companies. The company reported that medical cannabis sales declined marginally from 1,466.2 kilogram equivalents sold in the first fiscal quarter to 1,443.6 kilogram equivalents sold in the second quarter.
Neufeld and Cacciavillani will remain with Aphria as special advisors to the chairman and president to ensure "a smooth transition of institutional experience and strategic advice" until the new CEO is appointed.
Neufeld and Cacciavillani are "consummate entrepreneurs and the Aphria dream would not have become a reality without them", Simon said on the conference call.
"There is no active offer for the company and the proposal presented was determined to significantly undervalue the company", Neufeld said during the call. On behalf of the entire Aphria team, I want to express my gratitude to both.
Neufeld said: "When the Canadian medical cannabis market opened up five years ago, Cole was growing millions of potted flowers in Leamington, and he understood that cannabis was a natural product extension for the founding team's decades of experience as greenhouse growers in Leamington".
Aphria reported a 63-percent year-over-year jump in net revenues to CAD$21.7 million ($16.4 million), thanks to adult-use sales following the approval of recreational marijuana in Canada. As a result, adjusted gross margin fell to 47 percent from 64 percent in the prior quarter.
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