Newstrike Brands Ltd. (TSX: delisted and shares were converted into “HEXO”)
Ontario Superior Court of Justice: CV-20-636392-00CP
On behalf of former Newstrike Brands Ltd. (“Newstrike”) investors, only, this securities class action alleges that HEXO Corp. (“Hexo”) intentionally induced Newstrike to release a Management Circular, dated April 25, 2019, containing misrepresentations about Hexo’s business and operations in order to trick Newstrike investors to vote in favour of Hexo intention to acquire Newstrike in an all-stock deal (e.g., Hexo was using its artificially inflated shares as currency). The Claim seeks damages under section 131 of the Ontario Securities Act.
The Claim further alleges that, just as Hexo intended, investors did rely upon the misrepresentations and voted in favour of the acquisition. Thereon after, Newstrike investors were unknowingly holding toxic shares. Indeed, on June 13, October 10, and October 28, 2019, Hexo released statements that contradicted previously released statements about its business and operations in the Management Circular. The Claim concludes that had Hexo not misled Newstrike and Newstrike investors, the Class would not have voted in favour of the acquisition or, alternatively, demanded all cash.
Claim Issued: February 14, 2020
Class Period: All holders of Newstrick’s common shares as of May 17, 2019
Judge: Belobaba J.
Motion Record for Statutory Claim Filed: Unable to schedule a hearing date because of Covid-19
Shareholders’ Counsel: Andrew Morganti, Albert Pelletier, and Ian Literovich
Defendants’ Counsel: Linda Fuerst, Norton Rose (Toronto)