Canadian cannabis producer Aphria (APHA) is reviewing its Latin American acquisitions, after a short-seller report this week questioned whether they were rigged to surreptitiously enrich company insiders, gutting Aphria stock along the way. Marijuana stocks sold off hard Thursday.
Still, one of the firms behind that report published new allegations about the company later Thursday afternoon. That firm, Hindenburg Research, said it dug up “multiple irregularities” related to a company called Liberty Health Sciences, which the firm said was backed by Aprhia. Those findings, Hindenburg alleged, “raise more questions around believed undisclosed insider self-dealing.”
Earlier Thursday, Aphria, in a statement, said its board “reiterated its confidence” in the process leading up to the Latin American acquisitions. The statement said the board stood by Aphria’s Latin American operations as well.
“However,” Aphria said, “in the face of inaccurate and misleading accusations by certain short-sellers, whose sole interest is in profiting from a decline in the Company’s shares, it is undertaking a comprehensive review, led by a Special Committee of independent directors of these, and any other, allegations in the interest of protecting Aphria shareholders.”
Aphria said John M. Herhalt, an independent director, would chair the committee. Directors Shlomo Bibas and Tom Looney would also be on the committee. Aphria said each member was independent and joined the board after the Latin American acquisitions closed.
CEO Vic Neufeld added: “We are committed to protecting our shareholders and restoring market confidence by confirming all the facts through an independent process to rebut innuendo and deception.”
According to a BNN Bloomberg story on Wednesday, Neufeld said the company would soon provide a “line-by-line” response to the report. Quintessential Capital and Hindenburg Research released the report on Monday.
That report called Aphria a “shell game with a cannabis business on the side.” Aphria on Monday called the report “false and defamatory” and said it was pursuing legal options.
Aphria Inc. shares were trading at $4.82 per share on Thursday afternoon, up $0.31 (+6.87%). Year-to-date, APHA has declined -67.32%, versus a 1.01% rise in the benchmark S&P 500 index during the same period.
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