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HIGHLIGHTS
  1. Ascent will hold a shareholder meeting to contemplate replacing its board on June 6, amid a proxy fight.
  2. Current management says it will release potentially damaging information ahead of the meeting.
  3. The company could lose its licenses in Canada and Nevada.

Ascent Industries Corp. has agreed to hold a special shareholder meeting in June to contemplate replacing the company’s board of directors. However, in a warning shot at the dissident shareholders who demanded the meeting, Ascent’s management said it will release potentially damaging information about the company’s past administration, should the meeting actually take place.

Wednesday’s announcement is the latest move in a messy proxy fight, which has pitted the company’s former management and early investors against new management, which took over after Health Canada last fall suspended the licenses for Agrima Botanicals Corp., a subsidiary of Ascent, which is based in Maple Ridge, B.C.

Even with Health Canada threatening to permanently revoke Ascent’s licenses, the two shareholder groups continue to fight over the company; at stake are several valuable properties in B.C., a handful of operations in the U.S. and a portfolio of intellectual property and brands that were once popular in the black market.

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On Wednesday, Ascent’s current management agreed to a call from the activist group for a special meeting, to be held on June 6, that will discuss replacing the board. It warned, however, that it will release a Management Information Circular ahead of the meeting “which will contain a full history of the actions undertaken by both current and former members of management, as well as the Malcolm Group, that have resulted in the Company’s current financial and operational difficulties.”

“We anticipate that the shareholder dissident group won’t want that information out in public, so that meeting may not even happen,” said Jon Bey, Ascent’s vice president of investor relations.

The dissident group is made up of a handful of significant investors, including Terry Booth, CEO of Aurora Cannabis Inc. Ascent’s founders and former mangers, Philip Campbell, Reid Parr and James Poelzer, had been part of the group, but sold their Ascent shares last week to another activist.

In early February, the group signed over control of their stock to a shareholder named Drew Malcolm, who became the trustee of shares amounting to 44.7 per cent of the firm. In a press release on Feb. 8, the “Malcolm Group” called for the board to be replaced, warning that “that the incumbent Board has undertaken, or is imminently contemplating, unauthorised and potentially value destructive decisions that may put the very existence of the Corporation at risk.”

Ascent’s board and management, led by interim CEO Blair Jordan, former head of investment banking at Echelon Wealth Partners, is contemplating selling the company, or selling off individual assets. In December, Ascent hired Clarus Securities to advise on potential transactions.

“The company gets offers all the time from various groups wanting to buy assets and do deals, and so those are all on the table and the company is constantly looking at those,” Mr. Bey said.

Ascent has been in trouble with Health Canada since late summer, when, according to the company, its Agrima facility failed to “meet all of its record keeping and other compliance requirements” during a Health Canada inspection. The department suspended Agrima’s license in September, and announced in November that it intends to revoke the license. It gave Ascent until Feb. 20 to provide a final response. Health Canada has never elaborated on what led to the license suspension.

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Two weeks ago, Ascent’s subsidiary in Las Vegas likewise received a notice of the “potential suspension, revocation or non‐renewal” of its license. According to the company, the local government alleged the company was “operating outside the scope of the License,” failing to keep proper books and conducting an illegal promotional event. The local government also cited Ascent’s the ongoing license problems in Canada, the company said. A license suspension hearing is scheduled for March 28.

Members of the Malcolm Group have not responded to requests for comment, so it remains unclear what the group is pushing for, beyond the board of directors overhaul, or what “potentially value destructive decisions” it is concerned about.

The details around the license suspension likewise remain unclear. However, Agrima’s products, including the popular vaporizer TOKO, were widely available in the black market before the company received a license from Health Canada in late 2017.

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