Investment firm hits back at claims of improprieties with Aphria

Shares of Aphria Inc. continued to dive for a third consecutive day after a short-sellers’ report called its recent international acquisitions “largely worthless,” while the Toronto investment company at the centre of the allegations defended its actions.

The Leamington, Ont.based pot producer’s stock closed down 16.53 per cent Wednesday as it hit $5 on the Toronto Stock Exchange, from its previous close of $5.99 in the wake of a short-sellers’ report that called Aphria a “black hole for shareholders.”’

The dip in Aphria’s stock comes in addition to the roughly 43-per-cent drop from Monday and Tuesday.

It had closed at $10.51 on Friday.

Aphria’s stock rout began on Monday when Quintessential Capital Management and Hindenburg Research alleged in a lengthy report that the cannabis grower’s recent acquisition of assets in Colombia, Argentina and Jamaica totalling $280 million from Scythian Biosciences were “largely worthless.”

The short-sellers also alleged that “Aphria is part of a scheme orchestrated by a network of insiders to divert funds away from shareholders into their own pockets.”

On Wednesday, Scythian, now called SOL Global Investments Corp., said it is “satisfied with the outcome of the transaction.”

“The transaction — as with all transactions of this size — was thoroughly reviewed by both parties, each of which employed qualified and reputable financial analysts and prominent law firms to review the terms of the deal,” SOL said in a statement.

It said it plans on forming a special board committee and engage independent counsel to review the short-sellers’ allegations and “pursue all available legal relief.”

Meanwhile, Aphria has called the short-sellers’ allegations “false and defamatory.”

Analysts at BMO Capital Markets have slashed their target price for Aphria to $9 from $22, while analysts at GMP Securities have put its rating and target under review until there is more “visibility.”