If any company illustrated the worst excesses of the Canadian cannabis rush, it was Wayland Group (WAYL.C), formerly Maricann, a public market flimflam based on using overvalued stock to buy fabricated foreign assets for inflated prices, in an effort to increase the value of the parent by multiples of those inflated prices.
Our friends at Equity.Guru went hell for leather exposing the Wayland swindle, taking a lot of heat from bagholders who insisted Chris Parry had to be part of some grotesque short selling syndicate to say such malodorous things about their favourite LP.
Those same people are now holding stock of negligible value, as Wayland is looking for bankruptcy protection in an effort to flip a couple of assets and maybe dig themselves out of a giant hole.
The Wayland Group sought creditor protection under the CCAA in order to receive a short term stay of proceedings that will provide additional time to consider potential financing arrangements and restructuring transactions. The Wayland Group is in advanced discussions regarding potential arrangements for debtor-in-possession financing and it intends to continue its work with the monitor and its advisors in connection with these potential arrangements and in connection with its consideration of potential restructuring transactions.
This assemblage of mountebanks is not looking so lusty going forward.
Wayland anticipates providing a further update once additional details regarding the potential financing arrangements are available, though it can offer no assurance that any financing arrangements will be available on terms acceptable to the Wayland Group and the court, or at all.
For his part in the scam, former CEO Ben Ward is hiding, likely in Switzerland where he was residing while he was supposed to be overseeing his Canadian company assets.
At RBI, we like to find distressed assets and see if there’s a way to profit from their losses, but on this one that’s going to be toilsome.
You can’t short the stock because it’s halted, due to an ongoing problem filing audited financials and a high likelihood they won’t be able to file them going forward because dreadful calamity went down in the day.
And you can’t snag the assets from them cheap, mostly because they’re worthless.
Those assets were supposedly sold to ICC International (WRLD.U) for stock in that company last year. That deal never seemed to actually close, and along the way the value of ICC’s stock had fallen into the sub-$0.03 range, down 95% or so from when the deal was announced.
This past month, the two companies finally agreed on what was happening, which is a complete reversal.
Pursuant to the termination agreement, the company will relinquish its right to acquire Wayland’s international asset portfolio and Wayland will return the 246,613,995 common shares in the capital of ICC it previously received pursuant to the definitive agreement between both parties dated April 22, 2019. The termination agreement also provides that Wayland will retain certain assets previously transferred from Wayland to ICC, together with a mutual release.
Here’s how much those international assets are actually worth: The stock ICC is getting back is now worth just $5m, but they’d prefer to have the stock than the assets.
The ICC stock was supposed to go to the shareholders or WAYL as a dividend of sorts, but that never happened because the deal was never designed to close, it was designed to bring a bump in share price.
And the assets being sold were originally paid for in WAYL stock for the most part, which is also down 95%+ and which means the sellers are stuck holding the same worthless paper the bagholders are.
No wonder the audit isn’t going well.
The pity is, Wayland’s Canadian weed facility is, by all reports, a special asset. If Ward had focused on progressing that, rather than using his company to buy assets off himself (ah yes, we forgot to mention he was sometimes both the seller and buyer), this might have been a healthy company today.
But it was never about building a healthy company. It was always about one man enriching himself at the expense of all others, while his board watched in ignorance or compliance, and shareholders preferred to double down rather than consider they were riding a fraud.
Added to that: The Canadian asset is spoken for.
In an effort to get bridge financing to stay afloat, this:
Maricann Inc., a subsidiary of Wayland Group Corp., and Cryptologic have entered into an amended and restated loan agreement, effective as of Sept. 17, 2019, that provides for additional bridge loans from Cryptologic to Maricann. Each additional loan is expected to be in an amount equal to $1-million, subject to an overall aggregate cap of $25-million for all loans, including loans already advanced. Following Cryptologic’s advance of an additional loan of $1-million on Sept. 18, 2019, the aggregate principal amount of outstanding loans is $6-million.
The agreement has been entered into in connection with the previously announced letter of intent dated Aug. 2, 2019, pursuant to which Cryptologic intends to purchase the Canadian business of Wayland, including a partially complete cannabis cultivation and processing facility in Langton, Ont., which holds European Union good manufacturing practice certification.
Cryptologic will either buy the facility, or take it in loan defaults. Nothing here for us, fellows.
There will be more Wayland’s revealed in the weeks and months ahead. And some of those may be worth picking up at scrap value.
Wayland isn’t.
— Taint, Esq.
Awesome post! Keep up the great work! 🙂