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The debt-laden downfall of iAnthus Capital Holdings (IAN.C), or Hadley Ford’s folly

At one time, iAnthus Capital Holdings (IAN.C) was one of the most promising cannabis stocks on the rise, a true blue chip multi-state operator vying to supply the vast and balkanized American cannabis market.

The company’s share price peaked at nearly $10 in the latter half of 2018 thanks to its announced merger with MPX Bioceutical (MPX.C), a sizable investment from Gotham Green Partners and the vaunted stewardship of the company’s chief executive, Hadley Ford.

The former Goldman executive previously held a reputation for honesty at the helm, if not impeccable practices, after a mea culpa soothed investors outraged at a last-minute repricing of options.

But since its peak two years ago, the company’s fall from grace has been stark, and Hadley’s reputation undoubtedly tarnished.

The sector’s downturn as a whole is inarguable, and few companies have managed to keep above floodwaters, but shareholder confidence was further rocked by defaults on interest obligations and a report into misconduct by the company’s CEO.

In March, an investigative report claimed Hadley Ford had been acting in a conflict of interest as iAnthus’ CEO, self-dealing while claiming to be acting in shareholders’ best interests.

A special committee was formed to launch an independent investigation into Ford’s activities as a result, and two allegations were substantiated by the special committee.

The Special Committee concluded, and the Board accepted, that Ford entered into two undisclosed loans (one loan for US$100,000.00 with a related-party and the other for US$60,000.00 with a non-arm’s length party) and those loans created a potential or apparent conflict and should have been disclosed to the Board in a timely way.

Though the committee could not determine if the loans impacted business arrangements with the lenders, but the lack of disclosure was enough of a hanging offence.

Ford’s immediate resignation was announced today in conjunction with the committee’s findings and the appointment of iAnthus’ president, Randy Maslow, as interim CEO.

IAN.C, ianthus, hadley ford, resignation, Gotham Green, weedstocks
As seen by the proverbial Man on the Street

It was pointed out online that Ford’s other health-science business venture, Procure, has also faced financial difficulties after his stewardship.

The company’s proton treatment centers in Somerset and Oklahoma City defaulted on their debts and sought bankruptcy protection in 2018, according to the New York Times quoting Loop Capital.

This mirrors an IAN news release earlier this month announcing the default of interest obligations to their debenture holders on March 31, 2020.

“As of March 31, 2020, the aggregate principal amount outstanding on iAnthus’ debt obligations total $159.2 million, including $97.5 million of Secured Debentures, $60.0 million of Unsecured Debentures and $1.7 million of other debt obligations.”

–iAnthus

As of Q3 2019, the company noted $28 million in cash assets on the balance sheet, with the bulk of its assets comprised of goodwill and intangible assets. Q4 financials will be released shortly according to IAN after subsequent events have been included.

The company is up 15.7% on the day to $0.29 and currently has a valuation of $43.7 million. Look for a better positioned MSO to gobble up iAnthus as its woes continue.

 

–An objective observer

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