The NASDAQ-listed international medical cannabis operator announced last week that it will abandon its operations in Lesotho following a legal battle with a disgruntled former director.
In July, BusinessCann reported that Akanda’s wholly owned subsidiary in the Southern African country had 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 the six board members who were thrown out of the company on June 23 following a coup from ‘concerned shareholders’ who held a collective 54% stake in the company.
In what Akanda has described as an act of ‘retaliation’, Ms Mojela filed the ‘unauthorised’ application ‘without Akanda’s prior authorisation, knowledge or consent’ with the Lesotho High Court to place the company into liquidation.
At the time, Akanda said it would ‘pursue all of its available legal rights’ to reverse the liquidation, and seek to recover ‘significant loans it has made to Bophelo’ to fund its business plan, following its acquisition last year.
On November 16, however, the company said that ‘after careful consideration’ it has made the decision to ‘cease involvement in Bophelo’s Lesotho operations’.
Instead of continuing the legal battle, Akanda has apparently chosen to cut its losses and ‘assert its rights as a creditor’ of Bophelo.
Despite this, the company maintains its position that Ms Mojela acted ‘unilaterally for her own interest, without warning or notice, in breach of contract, fiduciary duty, and in a manner that was likely to bring the Company or Group Companies into disrepute’.
Ms Mojela has also launched legal action against Akanda, alleging wrongful termination of her service agreement. Akanda says it intends to ‘vigorously defend’ its position and seek compensation from Ms Mojela.
Akanda’s CEO Tej Virk said that despite the loss of one of Akanda’s key facilities, his company is continuing on its path to ‘operational profitability’.
“The Company has been forced into a position to exit Lesotho due to the unauthorised liquidation of Bophelo,” he added.
“However, having a presence in Africa was always about building for the long term and making a social impact on Lesotho’s communities. Fortuitously, we have seen higher demand from German buyers for products produced in Portugal over Lesotho due to quality and evolving EU cannabis import regulations. As such, Akanda is proving that it can more than offset this African cultivation operation with its Portuguese operation to meet German demand.”
The UK cannabis cultivator announced yesterday that it was now in a position to complete its acquisition of the 50% of DJT Group it does not currently own, a deal which has been on hold for months.
Furthermore, Ananda has proposed plans to waive obligations held by a number of directors acting in concert to make a ‘general offer’ for the company.
In a statement to investors, Ananda called for a general meeting on December 19 in order for independent investors to vote on these two proposed resolutions.
The company’s chairman and venture capitalist Charles Morgan has, according to Ananda, been funding the company’s operations through unsecured loans since January 2020.
As of September 30, 2022, Mr Morgan is understood to have loaned the company around £2.3m, which the company said it believes was the most appropriate funding mechanism due to ‘prevailing market conditions’.
Under Rule 9 of the Takeover Code, any individual who acquires 30% of the company’s total voting rights, or a group of shareholders considered to be acting ‘in concert’ with more than 50% of the total voting right, is required to make an offer to all the remaining shareholders to acquire their shares.
In 2019, the company agreed that five individuals, including Mr Morgan, CEO Melissa Sturgess, Head of Corporate Finance and Investor Relations Jeremy Sturgess-Smith, Peter Redmond and Michael Langoulant, were ‘acting in concert’.
The debts owed by the company to Mr Morgan following his £2.3m 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 upcoming general meeting.
Shareholders will also be asked to approve the acquisition of the remaining 50% of DJT Group’s shares which it does not already own from Anglia Salads.
The significant delay in completing this acquisition has meant that the ‘scope and costs’ agreed by both parties when the deal was first announced in June 2021 have had to be renegotiated.
As such, in recognition of the delta and level of funding provided to DJT by Ananda, it will now pay just £3.2m, less than half the £7.3m previously agreed upon.
This will be satisfied by the allotment 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 extreme patience whilst we’ve concluded 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, which allows us to focus all efforts more fully on the ongoing research activities and trial cultivations at DJT Plants, as well as securing all future benefits for the Company and, therefore, its shareholders.”
German cannabis operator SynBiotic revealed that Canopy Growth’s Founder and former Chairman and CEO Bruce Linton has joined its team.
Mr Linton has been appointed to head up SynBiotic’s newly created advisory board, and is understood to have invested his own capital in the company’s recent financing round, acquiring around a 5% stake in the business.
Notably, 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 stated: “I see enormous potential in the European market, particularly in Germany because of the recently announced legalisation in Europe’s largest economy.
“I regard SynBiotic as best positioned to take full advantage of the legalisation and become Europe’s dominant cannabis company.”