APHRIA BOSS FIRES BACK

Neufeld say pot firm will re­fute al­le­ga­tions

Windsor Star - - FRONT PAGE - TREVOR WILHELM twil­[email protected]­media.com Twit­ter.com/WinS­tarWil­helm

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.

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