Sundial Growers Inc (NASDAQ: SNDL) issued a response this morning in relation to a lawsuit filed against the firm in the US on Monday. The class action lawsuit is alleging that Sundial had lied to investors within its registration statement, by making false or misleading statements in relation to a supply agreement with that of Zenabis Global (TSX: ZENA).
In particular, the lawsuit is connection with reporting conducted by MarketWatch writer Max A. Cherney, who published a report on August 20 indicating that Sundial had provided Zenabis with 554 kilograms of poor quality product that was ultimately returned by Zenabis. The product reportedly had bits of rubber and mold contained within, along with other non cannabis material.
Within today’s response, Sundial did not deny that product had been returned. Rather, they indicated that the amount returned was “a fraction of the 554 kilograms erroneously quoted in the article.” Sundial then went further, stating, “The return represented a minimal percentage of our total production to date, had no impact on our second quarter financial results and is expected to have a negligible impact on our third quarter earnings.”
We strongly believe that Sundial did not mislead investors and disclosed all material information to investors in our IPO. We are therefore confident that the class action lawsuits filed against Sundial are completely without merit and intend to vigorously defend our company in these matters.Torsten Kuenzlen, CEO of Sundial
Despite Sundial’s statements, Zenabis’ own filings indicate that the firm had returned a half ton of bad product to a “third party” and that it had since terminated the supply agreement as a result as per the MarketWatch article. Zenabis, for it’s part, does not publicly disclose exactly whom the third party is.
Sundial investors have been on a wild ride since the firms initial IPO this past summer at $13.00, with the issuer closing yesterdays session at a price of $4.40.
Information for this briefing was found via Sedar and Sundial Growers. 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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.