Aphria and Liberty Health Sciences Split

It was announced this evening by Aphria Inc (TSX: APHA, NYSE: APHA) that the firm would be ending its long standing relationship with that of Liberty Health Sciences (CSE: LHS, OTCMKTS: LHSIF).

After initially investing in the firm in April 2017, which was to be known as “Aphria USA” as per the April 4, 2017 news release, the firm had recently reduced ties. This was a result of both the US listing that Aphria acquired late last year, as well as the now infamous short report that was released by QCM Funds in December of last year.

Under the terms of the split, Aphria has identified that it has received $47mm in cash proceeds, with an additional $10mm to be returned upon satisfaction of certain conditions. Rather than come from Liberty Health Sciences itself, the funding comes from the parties that entered the share purchase agreement with Aphria back in September 2018.

Most notably of this transaction, is that although the group of buyers retains 18.91% of the outstanding shares of Liberty Health Sciences, the firm managed to get by without reporting whom said buyers are via an early warning report. However, a day before the stated sale of 64.1mm shares of Liberty, Samuel Serruya picked up a report 51.3mm shares, bringing his total to 54mm.

As a result of the ties between Aphria and Liberty Health Sciences, including the sharing of directors, Liberty also fell under the target of the short report issued by QCM Funds. Both Vic Neufeld and John Cervini have resigned from the boards of both Aphria as well as Liberty Health Sciences in a bid to clean up both firms and distance themselves from the report.

Information for this analysis was found via Sedar, Liberty Health Sciences, and Aphria Inc. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.