The board said it will consider all 'value-maximizing alternatives," which could include a potential sale of the company
(CVE:N) (OTCMKTS:NXTTF) announced Monday that following a recent "expression of interest" in the company, the board has launched a strategic review to consider “all value-maximizing alternatives” including selling the company.
Namaste also announced that following an investigation by a special committee of the board of directors, it has terminated Sean Dollinger as CEO. He has also been removed from the board.
“Meni Morim has been appointed interim CEO of the company. To help strengthen our strategic partnerships, the company has also appointed Darren Gill as chief strategy officer,” according to a company statement.
Looking at a potential sale
The board said it has initiated a “formal strategic review process” to consider all value-maximizing alternatives, which could include a potential sale of the company.
“We are in the process of engaging an investment bank to advise a special committee of the board overseeing the process,” said the company.
READ: Namaste says it’s scouting for cafe locations in Toronto and Montreal
Namaste said it did not intend to set a definite schedule to complete its evaluation and there are "no guarantees” the process will result in a transaction.
“Namaste remains in a strong financial position, with cash balances intact, and will continue to execute on its unique and effective business strategy,” said the company.
Legal action against Sean Dollinger
The company said that the special committee's "thorough investigation" examined certain allegations against the company.
"The only one that was substantiated and required action, as recommended by the special committee, related to the sale of Namaste's US subsidiary, Dollinger Enterprises US Inc, in 2017, and subsequent transactions involving its assets and companies in which Sean Dollinger and Namaste's head of marketing David Hughes have a beneficial interest, as well as breaches of fiduciary duty by Sean Dollinger and evidence of self-dealing," said the company.
In light of the findings, the board decided that it is in the "best interest" of Namaste that Sean Dollinger be terminated as CEO "for cause and removed as director of the company."
In connection with the findings of the investigation, the company is also "commencing legal action against Sean Dollinger for damages and disgorgement."
The news took the markets by surprise as on Friday, Namaste had announced that it’s looking for locations in Toronto, Montreal and other cities for its Namaste Café chain.
The cannabis e-commerce company said the cafes will offer information on safe use and responsible methods of consumption for an age-appropriate audience.
As of 11:15 am ET, shares of Namaste were down 15.2% in Toronto at C$1.17.
Contact Uttara Choudhury at [email protected]
Follow her on : @UttaraProactive
-- Updates with legal action against former CEO Sean Dollinger; adds shares price --
