Liberty Health Sciences rebuts short seller attack as “materially inaccurate” amidst more change to board of directors
Florida-based medical cannabis company Liberty Health Sciences (OTCMKTS:LHSIF) was cleared of all wrongdoing by a third-party investigation into accusations of self-dealing first made by short-sellers Hindenburg Research last December. According to a statement released by the company, investigators found the allegations to be “materially inaccurate.”
Hindenburg’s report, the main focus of which was on the alleged bad faith deals of Aphria Inc. (NYSE:APHA) along with ousted-CEO Vic Neufeld and private equity investor Andy DeFrancesco, also accused Liberty Health Sciences of financial impropriety as well.
At one time Aphria was a major shareholder in Liberty Health, looking to the Florida-based company as a lynchpin of their American strategy. They were forced to divest, however, or risk being de-listed from the Toronto Stock Exchange.
Third-Party Investigator Concludes Liberty Health Sciences Short Seller Report was Materially Inaccurate https://t.co/2wGFyiM5eg
— Liberty Health Sciences (@LibertyHSInc) February 12, 2019
According to Hindenburg, Liberty Health bought 242 Cannabis, which cost the company $13.5 million, just six days following 242’s purchase of another property for $6.5 million. Private shell entities in the deal were allegedly owned by DeFrancesco’s wife.
According to the third-party report produced by Liberty Health, Hindenburg’s report was misleading. The company did make gains from the deal they said, but they purchased 242 for less than market value, “resulting in a net benefit to the company.”
Accusations that former Aphria CEO Vic Neufeld purchased discounted shares of Liberty Health days before announcing an investment in the company were rebutted as well. Investigators found that accusation “was not supported by available evidence and appeared to be based upon erroneous filings.”
It was a convoluted response to a convoluted issue, one that critics argued didn’t address the original allegations in a satisfying way.
In a statement to the Financial Post, short-seller Nate Anderson of Hindenburg Research stated that “despite declaring the report to be inaccurate, Liberty Health Sciences highlighted a total of zero inaccuracies except for the company’s own inaccurate filing. Four directors have since resigned, which should speak volumes.”
— TheCannalysts (@thecannalysts) February 12, 2019
Liberty also announced new changes to their board with the resignation of John Hick and Ian McKinnon for personal reasons.
The third party report was not released to the public.
Header Image: Liberty Health Sciences Campus