Unity is up in smoke at medical marijuana firm
Board warfare and allegations of financial impropriety have erupted at ASX-listed Epsilon Healthcare, putting at risk the largest medicinal cannabis manufacturing facility in the southern hemisphere.
Epsilon announced last week that it had appointed administrators Ian Purchas and Hugh Armenis from SV Partners to take control of the company and conduct an “urgent assessment of the company’s business operations and financial affairs”.
Mr Purchas said the “underlying” businesses were strong and the move into administration had come about due to “disunity” at board level.
“They (a majority of the board) formed the view the uncertainty at the board level may cause creditors to make claims, which the company may not have been able to pay,” he said.
The company had a market value of $7.2m when trading in its shares was suspended last week.
Epsilon last changed hands at 2.4c a share.
The company’s ASX announcements in recent months reveal a chaotic shuffle of board and management positions and allegations of potential financial impropriety.
On November 20, the company’s deputy chairman Alan Beasley proposed an extraordinary general meeting to remove chair Xiao (Josh) Cui as a company director, accusing him of engaging in financial impropriety, including the nondisclosure of payments from Epsilon to Watercrest Asset Management, which Mr Beasley says is owned by Mr Cui. On December 14, Mr Cui called for an EGM to remove Mr Beasley as a director. He rejects Mr Beasley’s claims and says payments from Epsilon to Watercrest constituted remuneration for his consultancy work. The administrators cancelled both EGMs.
Epsilon operates a medicinal cannabis manufacturing facility at Southport on the Gold Coast and a medicinal marijuana clinic under the Tetra Health brand.
Mr Purchas told the 25 workers at the facility he had no plans to make cuts.
“There are no job losses in the pipeline, it is not even being considered,” he said, adding that was based on available information to date.