Ascent Industries (ASNT.C) has had a roller coaster year. It hit the public markets in August to great acclaim with industry pundits like Equity.Guru’s own Chris Parry bullish on its prospects to facing down license suspensions.
The cannabis sector media darling soon rose to a $200 million-dollar market cap and looked like it could do no wrong. Then Health Canada (HC) ripped the wind out of its sails at the end of September, partially suspending licenses for Ascent’s wholly-owned subsidiary, Agrima Botanicals.
It went from bad to worse at the end of November, when HC threatened to take Agrima’s licenses away for alleged dealings the company had while a private entity.
The toll was heavy. Shares took a beating and three founders left the company in an attempt to restore market trust. In the end, Ascent Industries was given until December 17th to convince HC that it shouldn’t have its licenses revoked. Shares have limped along since.
Investors got a wake up call when Ascent, less than a week from its deadline, announced it had engaged Clarus Securities as financial adviser to explore strategic alternatives.
Chris Parry outlined what might lie ahead for Ascent as it attempts to maneuver out of this bureaucratic morass. Among the options was a complete sale of the company or a portioning off of its offending components.
The engagement of Clarus certainly signals those options now are becoming more of a possibility, and Ascent may be well setting itself, either in whole or in part, on the auction block.
Because of this, some investors may construe that Ascent has taken its eye off the ball and turned its back on winning HC’s approval. Blair Jordan, Ascent’s interim CEO, was quick to clarify Ascent’s announcement.
“While the company is focused first and foremost on remedying the situation with Health Canada, management believes that a review of strategic alternatives will allow it to make informed decisions about the company in the interests of all stakeholders.”
The whole operation is open-ended as there is no defined timeline for Ascent’s strategic review and the news release included obligatory disclaimers such as:
This review of strategic alternatives may result in a variety of outcomes or no outcome and there can be no assurance that the company will pursue or execute any specific action or transaction.
Bringing in Clarus may be prudent, but announcing it five days before you have to prove yourself to HC, doesn’t instill confidence of a successful appeal.
Despite a 2.63 percent bump to $0.195 in morning trading, the company’s SP turned south as afternoon approached, dropping 5.26 percent to $0.18.
Ascent will remain tight-lipped until it has something material to discuss, but if HC decides to drop the other shoe on December 17, the company better have a plan soon.
Like Parry said, thoughts and prayers.
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