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by Stockwatch Business Reporter
The Canadian Securities Exchange Composite Index slipped 0.45 point to 431.30 Monday. A few of October's biggest losers, Zenabis Global Inc. (ZENA) and Hexo Corp. (HEXO), continue to make headlines. Zenabis dropped half a cent to 25.5 cents on 12.31 million shares after announcing that it will hold a conference call tomorrow at 1:30 p.m. PT. The company will discuss its recently announced $20.8-million rights offering. After announcing the rights offering, Zenabis's shares plummeted to 29.5 cents from 49 cents, and the stock has continued to drift to today's closing price of 25.5 cents. Opting to raise money through equity rather than debt, Zenabis offered a 73-per-cent discount on share purchases through the offering. Existing shareholders will have the right to buy more shares at 15 cents, compared with the company's 49-cent share price before it announced the offering.
Zenabis will presumably plead its case as to why the market got this all wrong. The market reaction to the offering has baffled the company's chief executive officer, Andrew Grieve. Mr. Grieve insisted: "I don't believe it (has) decimated shareholder value. I believe it has negatively impacted the market's perception of shareholder value, but shareholder value in truth is an objective thing." Shareholders may be losing faith in Mr. Grieve's estimation of shareholder value. Since he became CEO of Zenabis on Jan. 21, 2019, the company has lost almost 95 per cent of the $4.25 it was trading at when he took over. When he was appointed CEO, Mr. Grieve decided to forego an annual salary and bonus compensation. In lieu of a salary, he received an option to buy 725,000 Zenabis shares at $4.25.
There can be no disputing Mr. Grieve's belief in the value of the company when he was appointed CEO. Unfortunately, he was incorrect and, like his shareholders, has paid dearly for it.
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