Aphria shares dive as investment firm hits back at short-sellers’ claims

TORONTO — 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 was down as much as 20 per cent in early afternoon trading Wednesday as it hit $4.76 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.”’

Aphria’s stock closed at $5 on Wednesday, marking a 52 per cent drop from its closing price of $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.”

The allegations, which have not been independently verified, include accusations that the official registered office of the Marigold Projects Jamaica Limited which Aphria acquired from SOL was a recently-sold abandoned building.

Quintessential and Hindenburg also said Aphria’s $50-million ABP acquisition in Argentina had claimed sales of US$11-million in 2017 but allege that the annual revenue was only US$430,000, according to a worker.

Aphria, one of the largest cannabis producers in Canada, on Tuesday said it stands by its Latin American operations. It added that Aphria’s chief executive Vic Neufeld and other members of its executive team personally bought a total of more than $3.1 million in Aphria shares on Monday as a demonstration of confidence in the company.

Quintessential and Hindenburg responded on Tuesday saying Aphria’s recent statements “did nothing to dispute our core findings.”

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.”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Ecologist Tony Blake was among several dozen area residents who participated in Tuesday’s public hearing on the future Molly Banister Drive extension. Blake argued for preserving trail connectedness and the wildlife corridor. (Photo by LANA MICHELIN/Advocate staff).
Red Deer city council votes to preserve the option to someday extend Molly Banister Drive

A nearly nine-hour public hearing ends with a 5-3 vote for keeping the road alignment

A server wears a mask at a restaurant, as the COVID-19 pandemic continues in Canada and around the world. THE CANADIAN PRESS/Graham Hughes
Health officials receive thousands of COVID-related complaints

About 800 to 1,000 people call health officials weekly

Shaun Janse van Rensburg, a Red Deer resident, said he is tired of changing clocks twice a year. Photo by Mamta Lulla/Advocate staff
After COVID, Kenney may consider referendum on daylight savings

Albertans may be divided on several issues today, but there’s a consensus… Continue reading

The COVID-19 death toll in Alberta reached 309, according to numbers posted on the province’s website Tuesday. (Image courtesy CDC)
Another 422 COVID cases reported in Alberta and two more deaths

The Alberta government reported 422 COVID-19 cases Tuesday and two more virus… Continue reading

test tube with the blood test is on the table next to the documents. Positive test for coronavirus covid-19. The concept of fighting a dangerous Chinese disease.
COVID-19 death toll verges on 10,000 as second wave continues to surge

Nearly 10,000 Canadians have died due to COVID-19, a mark of the… Continue reading

Alice Kolisnyk, deputy director of the Red Deer Food Bank, says the agency expects an increase in demand as the COVID-19 pandemic continues. Every new subscription to the Red Deer Advocate includes a $50 donation to the food bank. (Photo by BYRON HACKETT/Advocate Staff)
Support the food bank with a subscription to the Red Deer Advocate

The community’s most vulnerable members are always in need of a hand,… Continue reading

RCMP launch code of conduct probe in B.C. over violent arrest caught on video

RCMP launch code of conduct probe in B.C. over violent arrest caught on video

Clerk of the Privy Council Ian Shugart attends a swearing in ceremony at Rideau Hall in Ottawa on Tuesday, August 18, 2020. The country's top public servant is offering to testify about controversial redactions that were made to some 5,000 pages of documents on the WE Charity affair. THE CANADIAN PRESS/Sean Kilpatrick
Top public servant offers to explain redactions to WE Charity documents

Top public servant offers to explain redactions to WE Charity documents

COVID-19 death toll surpasses 10,000 as second wave continues to surge

COVID-19 death toll surpasses 10,000 as second wave continues to surge

UN urges Libyan rivals to implement cease-fire, pursue peace

UN urges Libyan rivals to implement cease-fire, pursue peace

Tourists walk on the beach as the tail end of Hurricane Zeta makes landfall in Playa del Carmen, Mexico, early Tuesday, Oct. 28, 2020. Zeta is leaving Mexico’s Yucatan Peninsula on a path that could hit New Orleans Wednesday night. (AP Photo/Tomas Stargardter)
Gulf Coast braces, again, for hurricane as Zeta takes aim

Gulf Coast braces, again, for hurricane as Zeta takes aim

President Donald Trump speaks at a campaign rally at HoverTech International, Monday, Oct. 26, 2020, in Allentown, Pa. (AP Photo/Alex Brandon)
Biden vows his unity can save country; Trump hits Midwest

Biden vows his unity can save country; Trump hits Midwest

FILE - In this Tuesday, May 7, 2019, file courtroom drawing, defendant Keith Raniere, center, leader of the secretive group NXIVM, is seated between his attorneys Paul DerOhannesian, left, and Marc Agnifilo during the first day of his sex trafficking trial. Raniere, a self-improvement guru whose organization NXIVM attracted millionaires and actresses among its adherents, faces sentencing Tuesday, Oct. 27, 2020, on convictions that he turned some female followers into sex slaves branded with his initials. (Elizabeth Williams via AP, File)
NXIVM guru gets 120 years in prison in sex-slaves case

NXIVM guru gets 120 years in prison in sex-slaves case

Most Read