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BY VANMALA SUBRAMANIAM

Embattled cannabis producer CannTrust Holdings Inc. fired chief executivePeter Aceto on Thursday and the company’schairman, Eric Paul, resigned at the requestof the board amidst a deepening scandal in-volving unlicensed growing.In a statement, the company, which has beenthe subject of a Health Canada investigation,said an internal probe had “uncovered newinformation” that led the board of directorsto terminate Aceto “with cause.”Robert Marcovitch, previously the chair ofthe special committee, will take over as CEOon an interim basis.

The company also said that in light of thenew information, it had “made a voluntarydisclosure to Health Canada.”The release did not mention the nature of thenew information.

A series of media reports this week have sug-gested that Aceto and Paul were aware of theunlicensed growing at the company Pelham,Ont., facility. On Wednesday, the FinancialPost reported that a former employee allegedAceto recorded a promotional company videoin front of a room full of unlicensed plants.An email obtained by The Globe and Mail in-dicated that both Aceto and Paul had beeninformed that unlicensed growing was tak-ing place, according to the paper.The moves came as a rival producer preparedto launch plans for an an all-stock hostile bid for the company.

Aleafia Health Inc., which is headed byformer Toronto police chief Julian Fantino,planned to announced the bid Friday morn-ing.The $605 million bid would see Aleafia offerto acquire all of the outstanding commonshares of CannTrust at a valuation of $4.00per share, a 55 per cent premium toCannTrust’s stock price as of Thursdayevening.

Each CannTrust share would be ex-changed for 3.6 Aleafia shares, and, if thedeal goes through, existing shareholders ofCannTrust would end up owning approxi-mately 65 per cent of Aleafia.Aleafia is expected to release more details onthe terms of the offer on Friday morning.

“We firmly believe that we can provideCannTrust stakeholders with a clear pathback to compliance while protecting the jobsof its employees, the medicine its patientsrequire and its shareholders’ lost value andare confident that we will meet these objec-tives following a successful bid,” said Fantino, the company’s chairman, in astatement the company planned to releaseFriday morning.

Since acknowledging earlier this month thatit was growing cannabis in five unlicensedrooms at its Pelham facility, CannTrust’sstock price has plunged 60 per cent, leavingthe once billion-dollar company with a mar-ket cap of just $364 million.Aleafia CEO Geoffrey Benic would not dis-close if his company had been in touch withCannTrust regarding the bid, but said thatthe decision to acquire CannTrust was madeover the last week.“I was really surprised at what happened atCannTrust, that frankly gave our entire in-dustry a black eye. It was very, very disap-pointing.

But what we are giving them now isa fair and equitable bid that opens the door toget this business back on track,” Benic toldFinancial Post. Benic added that Aleafia’s intention was topreserve “every single job at CannTrust,”but that “changes at the very top must oc-cur.”Last week, CannTrust appointed an indepen-dent special committee made up primarily ofthe company’s board to investigate the unli-censed growing fiasco.

“We see tremendous potential at CannTrust,primarily in their greenhouse, the number ofpatients they have and their brands.

We be-lieve we can bring compliance back to thiscompany,” Benic said.As of Thursday’s market close, Aleafia’sstock price was $1.11 and it had a marketvalue of just over $300 million. Aleafia ownsa medical cannabis clinic network under theCanabo Medical and GrowWise Healthbrands — patients of these clinics have his-torically purchased CannTrust’s medicalcannabis products over those of other li-censed producers, according to the company.

“Our companies are roughly the same in sizeand assets, and there are natural synergiesbecause our patients like CannTrust products,” Benic said.


This article is written and published by The Cannabis Stock


Disclaimer : The Cannabis Stock wants to promote the cannabis market with the best publication on the market. The Cannabis Stock does not recommend selling or buying any of the company mentioned and is not responsible for any losses that may result.


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