CannTrust’s 84% plunge from peak wipes out gains since IPO
|Toronto Star 21 Aug 2019 at 17:14|
The pot company has lost nearly two-thirds of its value since early July when it revealed it had broken Canadian regulations by growing cannabis in unlicensed areas of its greenhouse in Pelham, Ont., potentially putting its licence at risk.
The negative headlines have mounted since then. Chief executive officer Peter Aceto was fired and chairman Eric Paul resigned; a joint task force of securities regulators and police is investigating the company for potential “serious violations of the law”; auditor KPMG LLP withdrew its reports on the company’s year-end and first-quarter results; regulators found further breaches at a second facility in Vaughan, Ont.; and Ontario’s cannabis wholesaler is returning $2.9 million worth of products at the company’s expense.
CannTrust has hired Greenhill & Co. to explore potential alternatives including a sale.
The stock fell as low as $2.45 on Wednesday, down 5.8 per cent. If it ends the day at that level, it would be the lowest close since September 2017. Short interest stood at 8 per cent of the public float on Aug. 20, according to IHS Markit data.
CannTrust is in the midst of an “organizational transformation, which has included a number of departures and the reassignment of roles and responsibilities,” company spokeswoman Jane Shapiro said in an email Wednesday.
It has appointed Dan Hogan, formerly CEO of luggage and handbag retailer eBags Inc., as head of strategic priorities. Ken Doige has been named vice-president of security. Doige was previously vice-president of compliance and risk management at cannabis retailer Fire & Flower Holdings Corp.