APHRIA BOSS FIRES BACK

Neufeld say pot firm will refute allegations

The CEO of Leamington cannabis producer Aphria — under siege from short-sellers claiming backroom deals enriched insiders — said the company will release a report next week addressing every allegation.

Vic Neufeld said Aphria’s response will rebut the barrage of accusations levelled Monday that mostly focused on the company’s recent acquisitions in Latin America.

“You will find all of the 20-some allegations, line-by-line, point-bypoint with pictures — real pictures, truthful pictures — on what we have called LATAM asset acquisition,” Neufeld told the Star on Friday. “Every point will be very informative and will shed the real light on the story.”

He said that rebuttal will likely be released Wednesday. Aphria announced Thursday it had appointed an independent committee to review the company ’s recent acquisition of its Latin American holdings and confirm it was on the level.

Neufeld said Liberty Health Sciences, a company backed by Aphria that was the target of a second round of allegations, will likely release its own response on Monday. He said the possibility of litigation prevents him from addressing specific details until the official response next week.

“I am not hiding,” he said. “We’re just very focused on getting it right in terms of all of the facts — those that have been disclosed and those that we’re going to have to disclose — to make sure that we’re not preemptively giving selective disclosure.”

But he said it will be “proven by further forensic legal work” no insiders were enriched at the detriment of unwitting shareholders. That was one of many allegations from Quintessential Capital Management and the forensic analysis firm Hindenburg Research, who took aim at Aphria on Monday, calling it a “shell game” and a “black hole.”

Both Quintessential and Hindenburg were reportedly shortselling Aphria stock. A short-seller can profit if a security’s price declines.

They claim Aphria diverted funds into inflated investments held by insiders, and that its recent Latin American transactions are worthless. Hindenburg claimed the official registered office of Aphria’s $145-million Jamaican acquisition “is an abandoned building that was sold off by the bank earlier this year.”

The firm also alleges that Aphria’s $50-million Argentine acquisition, which claimed sales of US$11 million in 2017, actually only made $430,000. Hindenburg launched a second volley of attacks Thursday focused on a Florida property acquired by Liberty Health Sciences. The forensic analysis firm claims that rather than just buying the assets, the purchasers acquired it through a newly formed entity, netting the shell holders about $5 million in six days. Hindenburg alleges this transaction took place under Neufeld’s oversight. Hindenburg also claims that “unnamed individuals bought 242 million shares of Liberty in a highly dilutive $0.001 private placement,” just days after Aphria announced a plan to buy its shares at 208 times the price.

The Hindenburg report also states that Neufeld paid for 280,450 shares, but actually took control of more than 2.4 million. Neufeld said Friday one report did state that, but it was a clerical error that was fixed Thursday. “The shares I purchased, 280,450 shares, for some reason it got extrapolated to be over 2.4 million, which gave the Hindenburg guys the suspicion that somewhere I acquired for no cost 2.1 million shares,” he said. “That is an error made by Liberty Health Sciences and our legal firm. They have now corrected it and have so stated the correction.”

Neufeld said Aphria is still “going through the pros and cons” of suing those behind the reports.