Planet 13 Holdings (CSE: PLTH) has a bit of a cash problem. The company has effectively lost access to $21.5 million in cash following trouble with El Capitan Advisors, whom it engaged for cash management services.
El Capitan, who is said to be a registered investment advisor, was involved in a dispute with Casa Verde Capital and Casa Verde Capital EF, resulting in the courts issuing a judgement against El Capitan to the tune of US$35.0 million. Unfortunately for Planet 13, that judgement resulted in US$5.5 million of the funds El Capitan managed for it that were held at BridgeBank to be redirected to the Orange County Sheriff’s office in September.
A month later, Planet 13 discovered that its funds were tied up in the dispute, and filed a third party claim on the matter.
Following that filing, the company then requested a withdrawal of the remaining US$16.0 million it held with El Capitan in two different accounts. After being told the funds would be wired, weeks later the money has failed to show up, which is now being blamed on the Casa Verde judgement by El Capitan. Planet 13 now however states that it has reason to believe the remaining funds were instead misappropriated by El Capitan.
The company as a result is now stuck pursuing the funds, and has engaged legal counsel to attempt to get the funds returned. A hearing meanwhile related to the initial US$5.5 million claim is slated to occur November 30.
Despite the substantial sum of money that may now be gone, Planet 13 states that it does not expect the incident to have a material impact on its operations.
As of September 30, the firm reported a cash position of $36.8 million, with no breakdown of what percentage was placed into investments. It’s operating activities for the nine months ended September 30 meanwhile had cash outflows of $8.5 million, suggesting that even without those funds, it does still have some breathing room in terms of cash requirements.
Planet 13 last traded at $1.17 on the CSE.
Information for this briefing was found via Sedar and Planet 13 Holdings. 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. The author holds no licenses.
