Terry Booth, CEO of Aurora Cannabis Inc., interacts with media during the UFC-Aurora Partnership press conference at UFC APEX on July 24, 2019 in Las Vegas, Nevada (Photo by Chris Unger / Zuffa LLC / Zuffa LLC via Getty Images ).
Terry Booth will take over Australis Capital (AUSA.CN), the Las Vegas-based pot investment company, whose former management includes the co-founder and former CEO of Aurora Cannabis (ACB.TO) (ACB) routinely as a shadow puppet master to the Wants to undress the pockets of his “buddies”.
Booth will become Australis CEO under a contract announced Tuesday between the company and ALPS, a greenhouse design company that acquired Aurora in 2017. The company was bought back to its previous owner at a loss in May.
Under the agreement, Australis will pay ALPS between $ 13.7 million and $ 26.1 million for a 51 percent stake and the option to purchase the additional 49 percent. The amount paid depends on performance milestones. If the deal is approved, it is expected to close in the first quarter of 2021.
This is Booth’s second Australis win in recent months. Four senior executives were ousted in a heated proxy battle with a Booth-backed group of dissident shareholders. Victims of a leadership vote in November included CEO Harry DeMott, who took over the top position in a series of management changes in October.
We kicked her butt. It wasn’t even near. Terry Booth, Co-Founder and Former CEO of Aurora Cannabis
“We kicked them in the buttocks. It wasn’t even close, ”Booth said in an interview with Yahoo Finance Canada. “I don’t know why they didn’t believe us.”
According to Booth, previous management underestimated shareholder support for the activist group.
Despite months of tense public exchanges, he was on friendly terms with DeMott, and the two of them regularly exchange text messages.
“Business is business,” he added. “The people we brought on board are not all ex-Aurora friends. In fact, our board of directors has three people I don’t even know that well because COVID is the reason for this. I can’t sit down and shake hands with them. “
The group called “Affected Shareholders of Australis Capital” has claimed for months that previous management had no strategic direction and “misled shareholders on several fronts,” claiming they have rewarded themselves with generous compensation packages. Australis management denied these allegations.
The story goes on
The activists first made their message public in July, seeking a cash and stock deal to acquire Passport Technology, a fintech company founded and majority-owned by then Australian CEO Scott Dowty. The deal fell apart when Passport Technology went away in August.
The activists announced that Booth would take part in their campaign in August. Former Aurora senior staff members Jason Dyck and Roger Sykes were also involved in the group. Dyck was one of the five new directors shareholders voted to appoint in November.
Australis responded to affected shareholders in October by appointing new board members and the appointment of DeMott, a company insider, as CEO. The activists were not happy with the changes and criticized DeMott’s “miserable track record as a board member of Australis”, lack of leadership experience and “inability to create value”.
The activists’ group of shareholders said they collectively owned, directed or controlled approximately 8.45 percent of the outstanding common stock of Australis and said they received support from owners of over 31 percent of the outstanding common stock of Australis. Influential proxy consulting firms Glass Lewis & Co. and Institutional Shareholder Services advised clients to endorse Australis ‘list of directors and turned down the activists’ proposal.
At the end of the day, it’s him behind the curtain. Harry DeMott, former CEO of Australis Capital
In a November proxy conference call with investors, DeMott described the activist campaign as a “smoke screen to take control of the company” and predicted that it was driven by Booth’s ambitions to take control.
“Personally, I believe, and this is my personal belief, I cannot prove that if the Dissidents win, he will be appointed CEO and be admitted to the board without ever being voted on. I don’t think he wants to be on the board [of nominated directors]Because putting him on the board means opening him up to control and all attacks, ”DeMott said on a conference call on October 29th.
“At the end of the day, it’s him behind the curtain.”
Australis was once a subsidiary of Aurora, which focused on investing in US states where cannabis is legal. It was spun off from the Edmonton-based licensed manufacturer and listed on the Canadian Stock Exchange on September 21, 2018.
This was followed by a warning from the owner of the Toronto Stock Exchange in October 2017 that any publicly traded issuer must comply with all laws in the jurisdictions in which it operates. For Canadian pot companies, this has meant restrictions on direct ownership of pot manufacturing facilities south of the border, as the drug is illegal nationwide.
Booth stepped down from Aurora’s board of directors in June after stepping down as chief executive officer in February after seven years in the top position.
DeMott has been very critical of Booth’s leadership of Aurora. Since leaving, the company has shed hundreds of jobs and closed a number of additions that were built during his tenure as CEO.
“Australis started with Terry Booth as CEO of Aurora. Terry likes to do business. He likes to buy partial stakes in things. Not exactly what I would consider a very detailed man to be when it comes to closing these deals, ”he said on the October 29 appeal. “He exhausted all of his assets and opportunities and that became Australis. It was done in a way. “
Australis shares (AUSA.CN), whose portfolio includes investments in cloud-based software for pharmacies as well as multi-state cannabis operators, have fallen nearly 95 percent since their 2018 high.
Cam Battley, Aurora’s chief corporate officer during Booth’s tenure as CEO, hailed Australis in an interview with Yahoo Finance Canada in 2019 as the company’s “upfront team” in the US federal law allows cannabis sales. The company appears to be embarking on a different path to the US under Booth and Battley’s ultimate replacement, Miguel Martin.
“I look forward to rebuilding the relationship with Aurora that Australis didn’t quite have,” said Booth. “I didn’t meet Miguel. I look forward to it. It was set up. “
Terry Booth, CEO of Aurora Cannabis Inc., left, and Cam Battley, Chief Corporate Officer of Aurora Cannabis Inc., attend a press conference at the Toronto Stock Exchange (TSX) in Toronto, Ontario, Canada on Monday, May 14 , 2018. (Photographer: Cole Burston / Bloomberg via Getty Images)
America remains the focus for Australis under Booth, after the release on Tuesday. The company plans to leverage ALPS’s global rolodex of cultivators to buy and grow low-cost cannabis, manufacture “high-end luxury designer products,” and sell them under Australis’ various brands. The company sees its recent deals, including the upcoming acquisition of Las Vegas-based medical pot maker Green Therapeutics, as the first steps in a profitable strategy.
“I’m pumped,” said Booth. “The last seven months have been shitty for Australis investors. Many of them are family and friends from Alberta. They are great investors. You have been patient with this dissident group. And now I want them to hold their heads up. “
This deal to take over Green Therapeutics is not without controversy. Dr. Duke Fu, the current interim CEO of Australis, is associated with the company. The affected group of shareholders determined in October that he was serving as CEO of Green Therapeutics, which at the time was “involved in an ongoing lawsuit with AUSA”. The activists said this would make it impossible for him to carry out his fiduciary duties. Australis said in July that it would vigorously defend itself against claims of breach of contract. It is unclear whether the matter has been resolved. Duke was on the list of five new Australis directors supported by the activist group.
DeMott said he could not discuss the details of Booth’s plan for the company that he was aware of under a nondisclosure agreement. He said he expected the “squad of hand-picked” yes “men … led by Terry and his cronies” to implement a strategy that is more capital-intensive than expected and “detailed but conflicting”.
“I think the price shareholders will pay for this is one that shareholders probably cannot afford,” DeMott said. “That’s all I would say about your plan.”
Jeff Lagerquist is a Senior Reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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