The board of directors for Aphria Inc. (TSX: APHA, NYSE: APHA) just announced the appointment of an independent committee to review the company’s September acquisition of LATAM Holdings Inc.

Under the terms of that acquisition, Aphria assumed $1 million in LATAM debt and issued 15.6 million common shares. The acquisition netted Aphria 90% control of Colcanna SAS and ABP SA, 49% of Marigold Projects Jamaica Limited, and a right of first refusal from a Brazilian entity.

Aphria warned that investors “should exercise caution in relying on the misrepresentations and distortions contained in the report.”

The appointment of a special review committee comes in response to a recent negative report from Hindenburg Research and a corresponding presentation from Gabriel Grego of Quintessential Capital at the Kase Learning Shorting Conference. At its core, the report claimed the company’s recent acquisitions in Latin America are “largely worthless.”

In a press release issued later the same day, Aphria warned that investors “should exercise caution in relying on the misrepresentations and distortions contained in the report.”

A more complete statement regarding the specific accusations in the report is expected to arrive early next week from Aphria Head of Investor Relations John Sadler.

The newly appointed review committee consists of Tom Looney, Shlomo Biba, John M. Herhalt, who all joined the Aphria board of directors after the LATAM acquisition was completed.

Aphria issued a press release stating the committee would be free to retain independent advisors from outside the company and further commented:

“In the face of inaccurate and misleading accusations by certain short-sellers, whose sole interest is in profiting from a decline in the company’s shares, the company is undertaking a comprehensive review, led by a Special Committee of independent directors of these, and any other, allegations in the interest of protecting Aphria shareholders.

Aphria Chief Executive Officer Vic Neufeld also had this to say:

“We are committed to protecting our shareholders and restoring market confidence by confirming all the facts through an independent process to rebut innuendo and deception. Until then, it is business as usual at Aphria, as we continue taking significant steps to solidify our position as a premier global cannabis company.”

Grizzle’s Head of Research Scott Willis recently took an in-depth look at the claims from the Hindenburg report, comparing the prices of other comparable Latin American deals and gauging the likelihood that any regulations have been broken. You can read his full breakdown of the situation here.

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