What now for Cannasouth?
What happens next for medical cannabis company Cannasouth after it was put in voluntary administration at the directors’ request?
The rules say that at least two creditor meetings are held during the course of the administration.
A watershed meeting is then held at which creditors decide the future of the company. What happens next depends on whether the company is returned to shareholders, placed in liquidation, or enters a deed of company arrangement.
Cannasouth chief executive Mark Lucas, who resigned this week, said the intention was for the business to carry on if the administrators can come up with a new plan to get some funding in.
“As the largest shareholder in the business [8 per cent] that’s my primary concern — that they can actually keep the business moving forward, so let’s hope that that’s where it ends up,” Lucas said.
“The business itself has plenty of potential and the market is still growing,” he said. “In my opinion, it’s been a funding issue, and if we can get some additional costs out of the business, then there is no reason why it can’t still be successful.”
The administrators said that when Cannasouth announced the appointment of voluntary administrators on March 28, Lucas had offered them his full support “as and when required”.
The company listed in June 2019 but promptly slumped on debut.
The Waikato-based company had raised $10 million at 50 cents a share.
The stock opened at 51c but quickly fell on day one to 40c. Just before the stock was suspended, it traded at 9.8c.