Lets put them together for the Montours of Hexo.t infamey. The gruesome twosome have apparently pulled off a securities heist in the hundreds of millions. A scant $14m was paid out in severance for the former 'management' responsible for the Redecan acquisition. Key happy dudes were Michael Munzar chair. Trent MacDonald CFO. Donald Courtney, COO, and of course directing hand Sebastian St-Louis, CEO. They made off like penny bandits compared to the Montour brothers.
Peter Montour
Sebastian St-Louis
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HEXO = $690m loss
There's grim, and then there's HEXO's writedown of $616m in impairments, adding to a HUGE mountain of red ink. Sales of hugely expensive Redecan are down 29% and amount to gross sales of $6m per month. The payback period on that 'investment' is/was certainly over 100 years. Quebec based sales decreased by 49%. A Thanks to 'Keeler' on SH and stay tuned.
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Our boy has hijacked the BoD and HEXO belongs to 'First Nations groups'. After absorbing the work of others its appearing High Trail is indeed still converting debt payments into HEXO paper and selling it, every iffing day and to the tune of an average of 1.6m PER DAY. That splains the 90m odd new shares. Our best guess as to the Redecan Steal payback period is at least 77 YEARS. Very truly HEXO is likely the worst securities steal I have witnessed in this VSE lifetime. New numbers will appear in a month. Other than that, this horrid, horrid terrible chit ain't worth looking at.
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Latest in HEXO world is Montour mouthpiece Adam Arviv lauching a proxy battle to offload those directors not following his will appropriately. The approach OUGHT TO bust many guts, behold ... "Arviv also alleges that the HEXO management and Board were fully aware the Redecan group of investors was primarily comprised of First Nations individuals and supporters of First Nations groups, who, trusting in the professional management of the publicly-listed HEXO, invested their savings into this stock. This was the first foray into the capital markets for many of these First Nations individuals, who have now lost significant net worth and feel betrayed by the mismanagement of the Company."
And those self same natives collected HOW MUCH in cash again? "Under the terms of the Share Purchase Agreement the $925m purchase price paid to Redecan was:
$400m due on closing paid in cash; ..."
Arviv is wanting to offload noncompliant current Board Chair John Bell and Director Vincent Chiara whilst he and his 4 cronies tip the HEXO BoD into their favour.
Arviv baby was key advisor to the Redecan steal. He knows far better than most that Redecan was worth no more than what Peter Montour sunk into the enterprise over 4 scant years ... some $115m. The natives got paid roughly 4X in cash what Redecan was worth. The 67.9 million HEXO shares were and are a dead free bonus. THAT is where Mr. Adam Arviv's native 'feel betrayed' comes from. This man is now an apologist for his own fully larcenous deal? Pass on TOTAL bags of chit.
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Bloomberg is reporting ... "company (HEXO) must report positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the end of this month or it will default on its secured debt." Is this bad? Fuk yup. No way in hell EBITDA will be positive. And it gets worse ... "The filings state that if Hexo is in default of that convertible note deal, then High Trail can demand repayment of the loan in cash plus an 15 per cent premium and any accrued interest." Since $241m is owing that would be another $36.5m (US) gonezo.
https://www.bnnbloomberg.ca/hexo-outlines-cost-cutting-plan-aimed-at-boosting-cash-flow-by-175m-1.1709830
Redecan was co-founded by Peter Montour, Will Montour and Richard Redekop in 2014. It obtained its medical cannabis license in June 2014. It was issued a licence to sell dry cannabis to medical patients in March of 2015. The company was then shopped around to capitalists. Alta Vista Ventures announced a deal to acquire RedeCan Pharma for C$9.5m, cash and paper. That deal was ammended in 2016 before falling flat. Another deal to sell Redecan also failed. At the time of HEXO's $925m acquisition 5 years later, Redecan had 57 employees.
Under the terms of the Share Purchase Agreement the $925m purchase price paid to Redecan was:
$400m due on closing paid in cash; and
$525m due on closing paid through the issuance of HEXO common shares at an implied price per share of $7.53. Redecan shareholders hold 69.7m shares or about 31% of HEXO’s issued and outstanding common shares.
Peter James Montour - 'Day 1 loss' at HEXO and fun with numbers
The fully secured note was of much angst for HEXO's auditor who said as much. Red flags in securities get no brighter nor higher. Among the provisions of that unreadable note document was the deferral of a massive loss related to 'timing differences' and other 'non observable inputs'. A poster on Stockhouse points out the elephant in the room ... "So, who exactly paid off the $116 million short term loan?
The below is from the Redecan Balance Sheet - as released by Hexo.
It shows a debt of $116 million under current liabilities - Note 6.
Note 6 says the money is owed to 2516575 Ontario Inc. - which is majority owned by (Peter James) Montour."
A crude conversion of $96.2m US into CDN at the rate in May (1.2) gives us a total of $115m and change, the precise amount owed by Redecan to Montour. The REASON the Redecan buy was 4X to 5X too expensive becomes obvious. The repayment of Montour's debt was made by current HEXO stakeholders from note proceeds. There is no operating loss, yet this offense is deferring and amortizating one. This enterprise is lying about timing differences and non observable inputs. The 'Day 1 loss' is Montour's debt to Redecan and why should current HEXO stakeholders be eating a huge loss on that? The short answer is not.
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If we ask ourselves who benefited most from the brutal HEXO deal the answer is obvious. Private Redecan. Two main names are brothers William Todd Montour and Peter James Montour, who claimed seats on the HEXO BoD for their grossly overvalued Redecan.
Michael Munzar
Trent MacDonald
The 4 men directly responsible for the offense known as HEXO have all left the company. Michael Munzar chair, gone. Trent MacDonald CFO, gone. Donald Courtney, COO, gone and of course directing hand Sebastian St-Louis, CEO, gone. Your author has concluded a) HEXO pulled a major securities fraud, and b) there is virtually no time left before current stakeholders get wiped out.
Sébastien St-Louis
Donald Courtney
The Redecan acquisition was something between 4 and 5 times too expensive. That was confirmed by 2 months worth of numbers. We have what appears a theft in the hundreds of millions. When HEXO paper closed below $1.50 (US) in November the co was required to pay $20m per month towards the note's principal. ($241m US) Co is forced to retire that debt in months and is losing $100m every 3 months as it is. HEXO is in serious, SERIOUS trouble, and time there is virtually none at all.
In a nutshell a purchase this bad screams non-arms length, a conspiracy to defraud in other words. HEXO reeks to absolute high heaven.
"Hexo Corp. has released its financial results for the fiscal quarter ended Oct. 31, 2021 (Q1 2022), and announced "The path forward, a new strategic plan ..."
Great. Holy flyin fart says we, that's one big swack of red ink. That 'Day 1' loss has partially arrived, and that fully secured note ($241m with $20m due every month) is hugely suspect now. Quebec pot producer HEXO has been on a buying spree and faces a very severe cash crunch.
Redecan connected boyos hob nobbing with OMG bikers is never good.
Josh Hill (left) with HA Dwayne Patrick Smith (center) and HA Joel Rollin (right) Ex CEO, Sebastien St. Louis.
Jean-Francois Cloutier reports that Health Canada has completed its review of Josh Hill, Redecan and HEXO. HERE. In October, Sébastien St-Louis, co-founder and CEO, left the company. The Permanent Anti-Corruption Unit (UPAC) announced the next month that it was investigating the pot producer in connection with the presence of a close relative of the Hells Angels in his entourage. The UPAC is a Quebec government agency whose aim is to fight corruption, collusion and other economic crimes involving government procurement.
Things SURELY ain't looking good for those buried in HEXO paper. One might say HEXO paid 5X too much for Redecan, with a very flawed $925m deal that included $435m in fully secured US cash due in May 2023. ($241m owing) HEXO's capitalization is now something around $300m. Impossible to 'know' but the boys behind HEXO and Redecan appear to have pulled off a securities scam that robbed HEXO stakeholders stupid. HEXO appears doomed, and this is another black eye for securities regulation in Canada. HEXO's NASDAQ listing will be pulled in time, but thats minor compared to the chit waiting to hit the fan.
There was news as Will Montour (right) joins his brother on the BoD: "Hexo Corp. has appointed William Todd Montour to the company's board of directors ... Mr. Montour played a critical role in transforming Redecan from a medical supplier to a recreational cannabis powerhouse. Before joining Redecan, Mr. Montour spent 13 years supporting his family's tobacco company, the largest privately owned Indigenous company globally."
Hexo has denounced what it calls "false allegations" circulating about it and said it operates "at the highest standards of legal and regulatory compliance." Le Journal de Montreal reported last week that there are "troubling links" between Josh Hill and Hexo, one of the biggest suppliers to Quebec's cannabis retailing monopoly. Josh Hill is the son of Ken Hill, who made a fortune selling bootleg cigarettes from Ontario's Six Nations reserve before his death in 2021.
"Health Canada is keeping up with the news and following up with the license holders in question. The Department takes any notice of potential involvement with organized crime in the cannabis industry seriously.” Redecan was bought by HEXO in May for $925m. It had among its major shareholders the family of Josh Hill, who appears openly as an HA associate.
Joshua Raymond Hill was the sole director of one of eight numbered companies that were shareholders of Redecan.
Josh Hill (left) with HA Dwayne Patrick Smith (center) and HA Joel Rollin (right)
One of Quebec's largest pot suppliers acquired a business linked to a close friend of the Hells Angels. Josh Hill is a major shareholder of cannabis producer Redecan, and his family are now shareholders of Quebec cannabis giant HEXO since the latter bought Redecan in May 2021. https://www.hexocorp.com/
Josh Hill (right) with HA Jason Hall
Josh Hill had an office at Redecan. Current directors of HEXO Peter James Montour and Will Montour with Josh Hill.
The co refuses to answer any questions.
Josh Hill with HA Dwayne Patrick Smith.
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Grand River Enterprises (GRE)
Peter Montour, Mike Tyson, Jerry Montour
Ken Hill was the co-founder, along with Jerry Montour and his father Peter, of Grand River Enterprises in 1993. They turned GRE into a global player in the cigarette trade. By 2004 sales were $202m. 10 years later it exceeded a billion. It costs less than 24 cents to make a pack of 20 cigarettes which sell for 40 times that.
The company is the largest employer on the Six Nations reserve.
Tobacco is a $10b a year industry in Canada alone. The key to GRE's success is Section 87 of the Indian Act. Goods made and sold on reserves, including cigarettes, are exempt from tax. This lowers costs, giving those who sell Indigenous cigarettes a huge financial advantage.
According to court documents Ken Hill paid no income tax on his self-reported income of $5.3m in 2013 because of Indian Act exemptions.
Brittany Beaver, mother of his son who received a court order for child support of $33k a month from Hill, was trying to determine his wealth. Hill eventually revealed his car collection was valued at $5.58m, his 2010 Lazzara 76-foot yacht worth $2.76m and his Sea Ray Sundancer, $939k. He had a private jet leased, naturally. Hill had five other children by four different women — Joshua, Ryan, Jasmine, Gabriella and Jordan. Ken Hill died suddenly in January 2021 at age 62.
Jerry Montour held the greatest share of GRE at 30 per cent. In 1988, Peter and Jerry Montour were convicted of conspiracy to import pot and were sentenced to jail in Canada. The father and son were described as the key players in a drug smuggling operation that arranged to have 37 kg of pot transported from Mexico to Canada. Peter Montour and another man were also charged in 1988 with attempting to import marijuana but the charges against Montour were dropped when the other man offered to act as a police informant to help solve a cold case murder. Peter Montour was convicted of cigarette smuggling in 1997 and fined $640k, believed to be the largest penalty ever for smuggling in Ontario.
In 1997, Peter Montour and two other men were charged with extortion and uttering death threats in an alleged attempt to extort $4m from a former Oakville businessman.
The charges were eventually stayed.
GRE and four of its shareholders pursued a $3 billion lawsuit against Ottawa for forcing them to incorporate and lose their tax-exempt status. Ultimately, the partners decided they wouldn’t risk prison. GRE agreed to incorporate and pay excise taxes, and in 1997 it received its licence.
The State of California sued GRE in 2017. The state alleges GRE failed to comply with tobacco sales laws and illegally sold cigarettes. The lawsuit is the latest in a list launched by U.S. states against the company. GRE was sued by Ohio — a lawsuit that ended in 2011, when GRE paid close to $1m. New York also sued GRE.
See ----->1 in 3 cigarettes sold in Ontario are contraband
See ----->Smoking out Canada’s illegal tobacco
Josh Hill (left) with HA Dwayne Patrick Smith (center) and HA Joel Rollin (right)
Josh Hill (right) with HA Jason Hall
