Particular Committee investigation has concluded, Firm continues to establish the foundation for a sustainable future
VAUGHAN, ON, Oct. 24, 2019 /CNW/ – CannTrust Holdings Inc. (“CannTrust” or “the Company”, TSX: TRST, NYSE: CTST) supplied a progress update relating to:
· The submission of CannTrust‘s detailed remediation strategy to Wellness Canada. The Firm anticipates finishing all of the activities described inside the strategy by the finish of the initial quarter of 2020.
· The conclusion of the Particular Committee’s independent investigation, the findings of which have been accepted by the Company’s Board of Directors.
· A additional short-term reduction in CannTrust’s workforce in order to align with lowered operations following Wellness Canada‘s partial suspension of its licenses.
· Anticipated timing for the filing of CannTrust’s economic statements.
Submission of Remediation Strategy to Wellness Canada
CannTrust submitted its detailed remediation strategy to Wellness Canada on October 21, 2019. The remediation strategy specifies the actions the Firm has each taken and intends to take in order to address the measures identified by Wellness Canada as needed for the reinstatement of the Company’s licenses. It consists of information about an expanded extensive internal education system, a strengthened governance and operations framework, infrastructure enhancements, and prescribed accountabilities and timelines for a assortment of specified tasks. In addition, as outlined in the Company’s news release dated October 14, 2019, these actions consist of the destruction of each biological assets and inventory that have been not authorized by the Company’s license. The Firm will also take methods to recover all cannabis from distributors and retailers that has not currently been sold to finish buyers or returned to CannTrust.
The Firm anticipates finishing all of the activities described inside its remediation strategy by the finish of the initial quarter of 2020, though completion will be topic to Wellness Canada’s input and approval. To that finish, the Firm and Wellness Canada have currently engaged on numerous elements of the remediation strategy.
“CannTrust is confident that its remediation strategy addresses all of the compliance challenges identified by Wellness Canada,” stated Robert Marcovitch, CannTrust’s Chairman and interim Chief Executive Officer. “The Firm has currently created substantial progress in this regard, and is committed to finishing all of the remediation actions outlined in the strategy, with input from Wellness Canada as suitable. We think that, taken with each other, these actions will establish a powerful compliance culture that will meet regulatory requirements.”
Conclusion of Particular Committee’s Investigation
CannTrust’s Particular Committee was formed following the Company’s receipt of non-compliance reports from Wellness Canada on July eight, 2019. The Particular Committee’s mandate integrated finishing an independent investigation to recognize the causes of the Company’s regulatory non-compliance, establishing a strategy for addressing these causes, offering oversight for any operational actions needed to bring the Firm into regulatory compliance, and evaluating the Company’s strategic options.
The Particular Committee’s investigation into the Company’s regulatory non-compliance went beyond the observations in the Wellness Canada compliance reports, and integrated a extensive independent overview of the Company’s e-mail and other documents, as nicely as interviews with present and former workers, specific members of senior management, and all members of the present Board of the Directors.
The Particular Committee has shared its findings with the Company’s Board of Directors and Wellness Canada, and this aspect of the Particular Committee’s mandate is now full.
“Over the previous 3 months, the Particular Committee has worked tirelessly with its legal counsel and other experienced advisors to full a thorough and independent investigation,” stated Mark Dawber, Chair of the Particular Committee. “Importantly, the Particular Committee’s investigation located no proof that any of the remaining members of the Board have been conscious of or engaged in any non-compliance challenges.”
“I am extremely appreciative of the Particular Committee’s determined efforts to full the investigative phase of its mandate. Leveraging the Particular Committee’s findings, CannTrust has taken swift action to start addressing the aspects that led to its non-compliance, such as quite a few involuntary departures from the Company’s leadership group,” stated Mr. Marcovitch. “Our concentrate is now firmly on the future, strengthening our executive leadership by means of the addition of operational and regulatory knowledge. At the very same time, we are acting to increase the Company’s governance practices and to attract new Directors as aspect of a Board renewal course of action.”
Rightsizing Price Structure Pending License Reinstatement
To maximize efficiencies and preserve a powerful balance sheet, the Firm will temporarily streamline its workforce by as quite a few as 140 men and women, or roughly 1 quarter, by means of a series of phased layoffs among late October and the conclusion of 2019. This action is prudent mainly because of the Company’s considerably lowered operations following Wellness Canada’s partial suspension of its licenses. The headcount reductions are anticipated to outcome in month-to-month money savings of approximately $.four million, and the Firm will incur severance of up to $.eight million in the occasion that workers are not recalled inside 35 weeks. The realized money savings as a outcome of this layoff will be dependent on the timing of employee recalls pending reinstatement of the Company’s licenses by Wellness Canada.
“This was a tricky selection, but it is crucial that our workforce reflects the present needs of our company,” mentioned Mr. Marcovitch. “Reducing the Company’s present operating costs supports our economic sustainability, and areas us in the most effective position to completely resume production upon the reinstatement of our licenses. We appear forward to rehiring at that time, and when once again delivering higher-excellent, revolutionary goods to each our prospects and sufferers.”
Timing of Monetary Statements
CannTrust continues to operate closely with its experienced advisors, with a view towards refiling its restated audited economic statements for the year ended December 31, 2018, its restated interim economic statements for the initial quarter of 2019, and its interim economic statements for the second and third quarters of 2019, with each other with the connected management’s discussion and evaluation for the corresponding periods, inside the subsequent 60 days. The actual timing for filing these statements could be impacted by intervening events.
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