Aphria says review of Latam deal found certain directors had conflicting interests

Ciara Linnane - finance.yahoo.com Posted 5 years ago

Aphria Inc. said Friday a special committee has concluded a review of the acquisition of Latam Holdings Inc. and found that the price paid was comparable to rival deals. However, "based on further information available to the Special Committee, it appears that certain of the non-independent directors of the Company had conflicting interests in the Acquisition that were not fully disclosed to the Board," the company said in a statement. Aphria appointed the special committee in early December to review the deal, which was completed in September, after it came under fire from short seller Quintessential Capital Management, which said the C$280 million ($211 million) Latin America acquisitions raised "major red flags," as its research suggested they appeared largely worthless. On Friday, Aphria said the assets in Argentina, Colombia and Jamaica "were verified to be in place and continued to develop according to the Company's business plan since the Acquisition, consistent with Aphria's previous public disclosure." The deal was deemed to be within an acceptable range compared with similar acquisitions by competitors, albeit near the top of the range. The company will improve its corporate governance by ensuring the majority of its board are independent directors and will deliver training to management and board members; it will adopt best practices to manage potential conflicts of interest including disclosure of all direct or indirect ownership interests and rely more on experts and advisers. As previously announced, CEO Vic Neufeld and co-founder Cole Cacciavillani have completed a transition plan and effective March 1, 2019 will be retiring and surrendering their roles as directors, although they will remain in place as advisers. Irwin Simon, independent chair, will remain as interim CEO until a new one has been found. Shares rose more than 8% premarket and are up about 60% in 2019, while the S&P 500 has gained 0.5%.

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