The NASDAQ-listed international medical marijuana operator announced last week that it would abandon its operations in Lesotho following a legal battle with a disgruntled former director.
In July, BusinessCan reports that Akanda’s wholly-owned subsidiary in the Southern African country has been placed into liquidation by its former executive chairman, Louisa Mojela, and the Mophuti Matsoso Development Trust (MMD Trust), which she founded.
Ms Mojela was one of six board members thrown out of the company on June 23 following a coup by ‘concerned shareholders’ who held a combined 54% stake in the company.
In what Akanda described as an act of ‘retaliation’, Ms Mojela filed the ‘unauthorised’ application ‘without Akanda’s prior authorisation, knowledge or consent’ to the Lesotho High Court to place the company in liquidation.
At the time, Akanda said it would “pursue all its available legal rights” to reverse the liquidation, and seek to recover “significant loans it made to Bophelo” to finance its business plan, following the acquisition last year.
However, on 16 November the company said that ‘after careful consideration’ it had taken the decision to ‘cease involvement in Bophelo’s Lesotho operations’.
Instead of continuing the legal battle, Akanda apparently chose to cut his losses and ‘assert his rights as a creditor of Bophelo’.
Despite this, the company maintains its position that Ms Mojela ‘acted unilaterally for her own benefit, without warning or notice, breach of contract, fiduciary duty, and in a manner likely to bring the Company or Group companies into disrepute’.
Ms Mojela has also launched legal action against Akanda, who claims her employment contract was wrongfully terminated. Akanda says he intends to ‘vigorously defend’ his position and seek compensation from Ms Mojela.
Akanda CEO Tej Virk said despite the loss of one of Akanda’s key facilities, his company continues on its path to “operational profitability”.
“The company has been forced into a position to leave Lesotho due to the unauthorized liquidation of Bophelo,” he added.
“However, having a presence in Africa has always been about building for the long term and making a social impact on Lesotho’s communities. Coincidentally, we have seen increased demand from German buyers for products produced in Portugal over Lesotho due to quality and evolving EU regulations for the import of cannabis. As such, Akanda is proving that it can more than compensate for this African cultivation operation with its Portuguese operations to meet German demand.”
The British cannabis grower announced yesterday that it is now in a position to complete its acquisition of the 50% of DJT Group it does not currently own, a deal that has been on hold for months.
Furthermore, Ananda proposed plans to waive obligations held by a number of directors acting together to make a ‘general offer’ for the company.
In a statement to investors, Ananda called for a general meeting on December 19 so that independent investors can vote on these two proposed resolutions.
According to Ananda, the company’s chairman and venture capitalist Charles Morgan has been financing the company’s operations through unsecured loans since January 2020.
From 30 September 2022, Mr Morgan is said to have lent the company around £2.3m, which the company said was the most appropriate financing mechanism due to ‘prevailing market conditions’.
Under Rule 9 of the Takeover Code, any individual acquiring 30% of the company’s total voting rights, or a group of shareholders deemed to be acting ‘in concert’ with more than 50% of the total voting rights, is required to ‘ n offer to all the remaining shareholders to acquire their shares.
In 2019, the company agreed to have five individuals, including Mr Morgan, chief executive Melissa Sturgess, head of corporate finance and investor relations Jeremy Sturgess-Smith, Peter Redmond and Michael Langoulant, ‘act together’.
The debt owed by the company to Mr. Morgan is owed following his £2.3 million loan, would take the concert’s share of the total voting rights to around 71%, including 64% for Mr. Morgan, well above the threshold required for the concert to make an offer to buy out the company.
The takeover panel has now agreed to waive this obligation, subject to a vote put to independent shareholders at its forthcoming general meeting.
Shareholders will also be asked to approve the acquisition of the remaining 50% of DJT Group’s shares that it does not already own from Anglia Salads.
The significant delay in completing this acquisition meant that the ‘scope and cost’ agreed by both parties when the deal was first announced in June 2021 had to be renegotiated.
As such, in recognition of the delta and level of funding provided by Ananda to DJT, it will now pay just £3.2m, less than half the £7.3m previously agreed.
This will be satisfied by the allocation of 350,000,000 shares (previously 790,538,866 shares) at 0.2p each, representing just under 30% of the company’s enlarged share capital.
Ms Sturgess said: “We thank shareholders for their utmost patience while we completed this transaction to make DJT Plants a wholly-owned subsidiary of Ananda, and we also thank the Chairman of the Company for his significant and ongoing financial support.
“This is an extremely exciting next step for the company, enabling us to focus all efforts more fully on the ongoing research activities and trial operations at DJT Plants, as well as ensuring all future benefits for the company and therefore its shareholders. “
German cannabis operator SynBiotic has revealed that Canopy Growth’s founder and former chairman and CEO Bruce Linton has joined its team.
Mr Linton has been appointed to head SynBiotic’s newly created advisory board, and is understood to have invested his own capital in the company’s recent funding round, acquiring around a 5% stake in the business.
Mr Linton will reportedly take no fixed salary from his role, and will be paid according to the company’s share price performance and other operational milestones.
Mr Linton said: “I see enormous potential in the European market, particularly in Germany due to the recently announced legalization in Europe’s largest economy.
“I see SynBiotic as best positioned to take full advantage of legalization and become Europe’s dominant cannabis company.”