Pot Producer Aphria’s CEO to Step Down Following Short-Seller Allegations

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The company was hit with a devastating short report late past year as Hindenburg Research alleged that its worldwide acquisitions were highly questionable.

Aphria Inc. [s apha] Chief Executive Vic Neufeld will step down from the Canadian marijuana producer, Canada's Globe and Mail reported late Thursday night. "But to be brutally honest the journey has also taken a toll on health, family and personal priorities", Neufeld said.

The forensic analysis firm Hindenburg Research, as part of the short seller attack on Aphria, suggested that the company is "part of a scheme orchestrated by a network of insiders to divert funds away from shareholders into their own pockets". 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".

On December 3, Quintessential described Aphria as a "shell game with a cannabis business on the side" and said the stock was worth zero. The newly appointed chairman, Irwin Simon, and President Jakob Ripshtein, who joined the company from Diageo Plc in May, will "complete a smooth and responsible transition to a globally-minded executive leadership team", the company said.

The announcement came with a report on the company's second-quarter results. After the transition, Mr. Neufeld and Mr. Cacciavillani will serve as special advisers to the chair and president until a new CEO is appointed.

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Aphria also received a hostile takeover offer late past year from Ohio-based Xanthic Biopharma Inc., which does business as Green Growth Brands, that it rejected as being too low.

There is no active offer for the company, Neufeld told analysts, and Aphria's board of directors has established an independent committee of directors to consider proposals and formal offers received.

"I spent the last two days in Leamington at Aphria". Quintessential accused Aphria of announcing acquisitions in July that it called "largely worthless" and said were used to divert as much as $700 million, or almost half of its total net assets.

Revenue for the company's second quarter totaled C$21.7 million ($16.4 million), up from C$13.3 million ($10 million) the quarter before and C$8.5 million ($6.4 million) in the same period past year.

Outgoing CEO Vic Neufeld explained that the margin decline reflected "lower effective selling prices in the adult-use market, as well as temporarily lower yields and higher production costs in the quarter as we moved aggressively to build out production facilities and implement new automation processes". Aphria sold more than 1,900 kilogram equivalents of recreational cannabis between the October 17 legalization and November 30. The average selling price fell to $6.54 per gram, from $7.12 per gram in the prior quarter.

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