Published: Sun, January 13, 2019
Economy | By

Aphria chief exec, co-founder step aside amid short-seller claims

Aphria chief exec, co-founder step aside amid short-seller claims

The Leamington, Ont. -company also announced Friday that co-founder Cole Cacciavillani will also leave his current role as vice-president growing operations in the coming months, but both he and Neufeld will remain on the board.

But after a rocket-like ascent, Aphria became mired in controversy at the start of December, when a damning report by a short seller made the company's stock plummet. In a tweet on Friday, Quintessential said it felt it had been vindicated, and "with a new management team the company has a chance to a brighter future and we are accordingly moving on to new projects".

"It was just time for us to move aside", he told analysts on a call discussing Aphria's latest quarterly earnings.

But earlier this month, an investigation by financial news outlet Bloomberg put the short seller's claims in question after journalists visited Aphria assets and properties in Jamaica that Quintessential Capital had suggested did not exist.

"Now with legalization and globalization, including a huge market opportunity with positive developments in the U.S., Aphria's next generation of leadership may take the reins", Neufeld said in a release. It posted a net adjusted loss of $9.5 million compared to a gain of $1.5 million in the same quarter a year ago.

In a note to media, Aphria said that "working closely with Irwin D. Simon, Aphria's recently appointed independent Chair, and President Jakob Ripshtein, Mr. Neufeld and Mr. Cacciavillani intend to complete a smooth and responsible transition to a globally-minded executive leadership team for the long-term benefit of the company's patients, shareholders, customers, and employees".

Aphria has since become the target of a takeover attempt by Green Growth Brands, and there's renewed criticism in some quarters about insider connections between the two companies.

Aphria reported revenue of $21.7 million for the quarter ended November 30, below the average analyst estimate of $28.8 million.

Meanwhile, Columbus, Ohio-based Green Growth Brands Ltd. said in December it plans to launch a $2.8-billion takeover bid for Aphria despite being spurned from initial advances to buy the company.

The company's gross margin decline to 47 per cent of net revenue from 64 per cent was attributed to lower selling prices in the Canadian recreational cannabis market, lower grow yields and higher production costs.

The shares were seen losing an incremental 3.8 percent to $6.33 in premarket trading Friday. This is later than originally expected due to a backlog at Health Canada, which issues licenses to the industry.

Aphria said it now expects to generate the first sales from its new facilities in calendar 2019 pending approval by Health Canada. Year-to-date, APHA has gained 22.67%, versus a 3.25% rise in the benchmark S&P 500 index during the same period.

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