VAUGHAN, ON, Aug. 1, 2019 /CNW/ - CannTrust Holdings Inc.
("CannTrust" or the "Company", TSX: TRST, NYSE: CTST) today
announced that it will likely miss its filing deadline (the "Filing
Deadline") of August 14, 2019 to file
an interim financial report for the three and six month periods
ended June 30, 2019, an interim
management's discussion and analysis for the corresponding period
and certifications of interim filings ("Q2 Filings").
Management is of the view that there is significant uncertainty
with respect to the potential impact of pending Health Canada
decisions on the valuation of the Company's inventory and
biological assets and revenue recognition. As previously
disclosed, the Company received a compliance report from Health
Canada notifying it that its Niagara Facility in Pelham, Ontario is non-compliant with certain
regulations based on observations made by Health Canada regarding
the growing of cannabis in five unlicensed rooms from October 2018 to March
2019 and inaccurate information provided to Health Canada by
employees. Health Canada placed a hold on inventory which
includes approximately 5,200 kg of dried cannabis that was impacted
by the previously unlicensed rooms at the Company's Niagara
Facility. The Company instituted a voluntary hold of approximately
7,500 kg of dried cannabis equivalent at its extraction,
manufacturing and packaging facility in Vaughan, Ontario that was impacted by the
previously unlicensed rooms. The Company estimates the value
of the impacted inventory and biological assets is approximately
$51 million as at June 30, 2019.
The uncertainty with respect to the nature, timing and potential
financial impact of pending Health Canada decisions on the
valuation of the Company's inventory and biological assets and
revenue recognition relates to the fact that Health Canada has
broad discretion to exercise a wide range of regulatory powers.
Until Health Canada has made determinations with respect to the
exercise of its regulatory powers, the potential impact on the
Company's operations and financial condition remains unknown.
In addition to impacting the Company's financial disclosure in the
Q2 Filings, the effects of the pending Health Canada decisions may
also require restatement of certain of the Company's historical
financial statements and related management's discussion and
analysis for the periods ended December 31,
2018 and March 31, 2019
("Restated Financials").
The Company anticipates and expects to file the Q2 Filings and,
if required, the Restated Financials, and any other periodic
disclosure required to be filed under applicable securities laws as
soon as practicable once information relevant to related matters is
available.
The Company has informed staff of the Ontario Securities
Commission (the "OSC") about its anticipated delay of the Q2
Filings and potential need for Restated Financials and has applied
to the OSC pursuant to Part 4 of National Policy 12-203 -
Management Cease Trade Orders ("NP 12-203") for a Management
Cease Trade Order ("MCTO") pending the filing of the Q2 Filings and
any Restated Financials if required. If a MCTO is issued, the
Company intends to satisfy the provisions of the "alternative
information guidelines" as set out in NP 12-203, including the
requirement to file bi-weekly status reports in the form of news
releases containing prescribed updating information, until the Q2
Filings and required Restated Financials, if any, are made. A MCTO
would not generally affect the ability of persons who are not
directors, officers or insiders of the Company to trade in
securities of the Company. There can be no assurance that a MCTO
will be issued.
The Company has established a blackout on trading by directors,
officers and other insiders of the Company, and intends to continue
the blackout until the Q2 Filings and any Restated Financials, if
required, have been filed. The Company will consider various
remediation options and take appropriate actions in consultation
with Health Canada and the OSC where appropriate.
The Company is not currently subject to any insolvency
proceedings. If the Company provides any information to any of its
creditors during the period in which it is in default of filing the
Q2 Filings or any Restated Financials, if required, the Company
confirms that it will also file material change reports on SEDAR
containing such information as is required.
As announced yesterday, the Company's Special Committee of
independent directors has commenced a review of strategic
alternatives and retained Greenhill & Co. Canada Ltd. as its
financial advisor. That review is in its early stages and is
ongoing. Today, staff of the OSC advised the Special Committee's
legal counsel that an investigation has been opened into matters
and parties related to CannTrust and the investigation has been
assigned to the Joint Serious Offences Team of the Enforcement
Branch of the OSC.
About CannTrust
CannTrust is a federally regulated licensed producer of medical
and recreational cannabis in Canada. Founded by pharmacists, CannTrust
brings more than 40 years of pharmaceutical and healthcare
experience to the medical cannabis industry and serves medical
patients with its dried, extract and capsule products. The Company
operates its Niagara Perpetual Harvest Facility in Pelham, Ontario, and prepares and packages its
product portfolio at its manufacturing centre of excellence in
Vaughan, Ontario. The Company has
also purchased 81 acres of land in British Columbia and expects to secure over
240 acres of land in total for low-cost outdoor cultivation which
it will use for its extraction-based products.
Forward-Looking Statements
This press release contains "forward-looking information" within
the meaning of Canadian Securities laws and "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and other applicable
United States safe harbor laws,
and such statements are based upon CannTrust's current internal
expectations, estimates, projections, assumptions and beliefs and
views of future events. Forward-looking information and
forward-looking statements can be identified by the use of
forward-looking terminology such as "believes", "expect",
"likely", "may", "will", "should", "intend", "anticipate",
"potential", "proposed", "estimate" and other similar words,
including negative and grammatical variations thereof, or
statements that certain events or conditions "may", "would" or
"will" happen, or by discussions of strategy.
The forward-looking information and statements in this news
release include statements relating to the expected timeframe and
resolution for the completion of Health Canada's quality product
testing, Health Canada's determinations and decisions with respect
to regulatory compliance matters, the Company's response to Health
Canada's compliance report and the anticipated timing for filing of
the Q2 Filings and any Restated Financials, if required, pending
the outcome of Health Canada's review. Forward-looking information
and statements necessarily involve known and unknown risks,
including, without limitation: results of Health Canada's quality
product testing, including orders and compliance measures required
by Health Canada and their impact on the operations and financial
condition of the Company and its ability to prepare the Q2 Filings
and any Restated Financials, if required; regulatory approval;
risks associated with general economic conditions; adverse industry
events; loss of markets; future legislative and regulatory
developments in Canada,
the United States and elsewhere;
the cannabis industry in Canada
generally; and, the ability of CannTrust to implement its business
strategies.
Any forward-looking information and statements speak only as of
the date on which they are made, and, except as required by law,
CannTrust does not undertake any obligation to update or revise any
forward-looking information or statements, whether as a result of
new information, future events or otherwise. New factors emerge
from time to time, and it is not possible for CannTrust to predict
all such factors. When considering these forward-looking
information and statements, readers should keep in mind the risk
factors and other cautionary statements in CannTrust's Annual
Information Form dated March 28, 2019
(the "AIF") and filed with the applicable Canadian securities
regulatory authorities on SEDAR at www.sedar.com and filed as
an exhibit CannTrust's Form 40-F annual report under the United
States Securities Exchange Act of 1934, as amended, with the United
States Securities and Exchange Commission on EDGAR at www.sec.gov.
The risk factors and other factors noted in the AIF could cause
actual events or results to differ materially from those described
in any forward-looking information or statements.
The TSX and NYSE do not accept responsibility for the adequacy
or accuracy of this release.
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SOURCE CannTrust Holdings Inc.