Aphria's Jamaica Weed Farm is "Thriving," Despite Short Sellers' Doubts

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Alert Sent 2019-01-07 09:32:34 AM ET

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Market Chatter: Aphria's Jamaica Weed Farm is "Thriving," Despite Short Sellers' Doubts

2019-01-07 09:26:44 AM ET (MT Newswires)



09:26 AM EST, 01/07/2019 (MT Newswires) -- As Canadian pot producer Aphria Inc. (APHA.TO, APHA) tells it, a farm outside Kingston, Jamaica, where 300 marijuana plants "sit in manicured rows," is part of its growing portfolio of international assets, Bloomberg News reported in a feature published over the weekend.


But, Bloomberg noted, for two U.S. short sellers, the farm is one of the catalysts for an offensive that sent Aphria shares plunging in December. It noted Hindenburg Research and Quintessential Capital Management questioned the farm's existence and said Aphria overpaid for "largely worthless" assets in a three-country deal.


According to the report, the truth -- as, it claimed, was uncovered by a tour of the Jamaican countryside and the back streets of Buenos Aires by Bloomberg -- is "more nuanced." In the nascent world of global pot investing, Bloomberg said, assets can be "hard to document and even harder to value." Though, it added, "first mover advantage may hold big rewards."


Bloomberg noted Aphria acquired LATAM Holdings Inc. in a September deal that the Leamington, Ontario-based company valued at $193 million when it was announced and SOL Global Investments Corp., the seller, said was worth $298 million when it closed. The assets include Marigold Projects, a licensed Jamaican grower, a pharmaceutical distribution warehouse in Argentina and licensed farmland in Colombia.


In a separate report, Bloomberg noted Aphria reports results for the fiscal second quarter on Jan. 11. It said there will undoubtedly be plenty of questions on the conference call about the allegations from short sellers that it overpaid for "worthless" assets in Latin America. Aphria called the claims by Quintessential Capital Management and Hindenburg Research "malicious and self-serving."

Globe peels back covers on Aphria investor DeFrancesco

Globe peels back covers on Aphria investor DeFrancesco

Aphria Inc (C:APHA) 

Shares Issued 249,762,289
Last Close 1/4/2019 $8.07

Monday January 7 2019 - In the News

The Globe and Mail reports in its Saturday edition that in early December, short-sellers took aim at Aphria over a series of deals. A triple-bylined item led by Christina Pellegrini says that the short-sellers alleged that Aphria issued almost $300-million in stock to buy assets in Jamaica, Colombia and Argentina that have almost no value and that, even worse, the deals enriched investors with ties to Aphria. At the centre of those deals was the 48-year-old Andy DeFrancesco, a long-time deal-maker and trader who helped get Aphria started. Aphria has not yet released its promised point-by-point rebuttal of the short-sellers' lengthy report. That leaves Mr. DeFrancesco to defend himself and those apparently cozy deals. During his 26-year career on Bay Street,

 Mr. DeFrancesco said, he has hit some grand slams such as American Apparel, Dalradian Resources and Kahala Brands. When Mr. DeFrancesco joined Canaccord Genuity in 2001 and was in search of an investment-banking deal, he brought Yogen Fruz into the firm, he said. He has also run into trouble. The short-sellers seized on his mixed track record, highlighting his connections to defendants in a U.S. Securities and Exchange Commission action alleging a pump-and-dump scheme.

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