VAUGHAN, ON, Aug. 15, 2019 /CNW/ - CannTrust Holdings Inc.
("CannTrust" or the "Company", TSX: TRST, NYSE: CTST) today
provided an interim update on various matters.
Management Cease Trade Order
CannTrust announced that its application for a management cease
trade order ("MCTO") under National Policy 12-203 – Management
Cease Trade Orders ("NP 12-203") has been approved by the
Ontario Securities Commission ("OSC"). The MCTO does not affect the
ability of investors who are not insiders to trade in the
securities of the Company.
CannTrust announced on August 1,
2019 that it was filing an application seeking a MCTO from
the OSC because the Company was likely to miss its 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 (the "Q2 Financials").
The timing and content of CannTrust restoring any defaults in
its Q2 Financials will depend, in large measure, upon the
timing and impact of Health Canada's decisions regarding the
Company's non-compliance with regulatory requirements. Although the
Company, under the supervision of the Special Committee, is
preparing a remediation plan for submission to, and consideration
by Health Canada, Health Canada has advised the Company that it is
unable to provide any guidance about the timing or content of its
decisions concerning the Company.
The MCTO prohibits the directors and executive officers of the
Company from trading in securities of the Company until two full
business days after all filings CannTrust is required to make under
Ontario securities laws are made,
including filing of the Q2 Financials. The MCTO does not affect the
ability of any other persons to trade in the securities of the
Company. CannTrust had already voluntarily imposed a blackout
period on its directors and executive officers trading in the
Company's securities.
The Company intends to satisfy the provisions of the alternative
information guidelines in NP 12-203 by filing bi-weekly status
reports in the form of news releases containing prescribed updating
information until the Q2 Financials are filed.
New York Stock Exchange Discussions
The Company has been working pro-actively with the New York
Stock Exchange ("NYSE") to keep the NYSE apprised of its
interactions with Health Canada and related matters. Following a
discussion on August 9, 2019 between
representatives of the NYSE, the Company, the Company's counsel and
counsel to the Company's special committee of independent directors
(the "Special Committee"), the NYSE advised the Company that as a
consequence of the Company's announcements concerning its audited
financial statements for the year ended December 31, 2018 and its unaudited financial
statements for the quarter ended March 31,
2019, the Company is viewed as no longer having a complete
annual report on Form 40-F on file for the year ended December 31, 2018.
Trading of the Company's securities on the TSX and NYSE
continues. However, the NYSE advised the Company that (a) it
will closely monitor the status of the Company's late filing and
any related public disclosures for up to six months from its due
date, and (b) if the Company fails to file its annual report and
any subsequent reports within six months of their filing due dates,
the NYSE will determine, in its sole discretion, whether to halt
trading in the Company's securities or whether to allow the
Company's securities to trade for up to an additional six months,
depending upon the circumstances. If the NYSE determines that an
additional six-month trading period is not appropriate, suspension
and delisting procedures will commence pursuant to Section 804.00
of the NYSE's Listed Company Manual. Regardless of the procedures
described above, the NYSE may commence delisting proceedings at any
time during the period that is available to complete the filing, if
circumstances warrant.
Interim Financial Update
As previously disclosed, the Company estimates the value of the
inventory and biological assets impacted by the pending Health
Canada decisions is approximately $51
million as at June 30, 2019.
Management of the Company further estimates the impacted inventory
represents approximately 53% of the Company's total inventory as at
June 30, 2019 and the impacted
biological assets represent approximately 30% of the Company's
total biological assets as at June 30,
2019.
As at June 30, 2019, the Company
had approximately $250 million in
cash and cash equivalents.
Remediation Efforts
Under the supervision of the Special Committee, the Company is
preparing a remediation plan for submission to and consideration by
Health Canada. Although the Special Committee is directing
the Company to work closely with Health Canada to remediate the
root causes of any non-compliance identified by Health Canada, to
date the Company has not had any substantive discussions with
Health Canada concerning remediation matters and Health Canada has
advised the Company that it is currently unable to provide any
guidance about the timing or content of its decisions concerning
the Company. As previously announced, Health Canada has
placed a hold on inventory which includes approximately 5,200kg of
dried cannabis that was harvested in the previously unlicensed
rooms in Pelham, until it deems
that the Company is compliant with regulations. In addition,
CannTrust has instituted a voluntary hold of approximately 7,500kg
of dried cannabis equivalent at its Vaughan manufacturing facility that was
produced in the previously unlicensed rooms. Health Canada
has broad discretion to exercise a wide range of regulatory
powers. In the event that Health Canada orders the
destruction of all or a substantial portion of the product grown in
the previously unlicensed rooms, the Company's results for the
second quarter of 2019 would be materially adversely
impacted. Health Canada has given no clear indication of what
decisions it will come to with respect to the Company.
About CannTrust
CannTrust is a federally regulated licensed producer of medical
and recreational cannabis in Canada. Founded by pharmacists, CannTrust
brings 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 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 corrective actions being
taken by the Company, Health Canada's pending determinations
(including with respect to the Company's inventory and biological
assets) and the NYSE's ongoing monitoring of the Company's late
filings and its decision on whether to halt trading in the
Company's securities. Forward-looking information and statements
necessarily involve known and unknown risks, including, without
limitation: results of Health Canada's investigation, including
orders and compliance measures required by Health Canada and their
impact on the operations, inventory, assets and financial condition
of the Company; the Company's implementation of remediation plans
and related actions; the timing and content of restoring any
defaults in its continuous disclosure filings; the Company's
ability to file its annual report and any subsequent delayed
filings; whether the NYSE commences delisting proceedings at any
time; 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.