How World Class Extractions (PUMP) killed a $25m bailout for HydRx & took their $50m facility for $5m

07/30/2020

A few days ago, World Class Extractions (PUMP.C) announced they’d done a deal with a ‘leading licensed producer’ (that we figured out is Aphria – APHA.T) to take over HydRx Farms’ $11.5 million debenture for $5 million. That deal brought WCE the potential to (should the debt not be paid, and it won’t be) take over a facility that has all the licenses you could ever want, and that cost $50 million to build – for $5 million.

For Aphria, they’re happy to get a portion of the debt back without having to take over a small cannabis grow facility they can’t use.

For World Class Extractions, they’re happy to get their own supply for the foreseeable future that they can then use to, go figure, extract cannabis oil.

GOOD DEAL FOR EVERYONE.

Well, not everyone.

HydRx CEO Har Grover is a little flustered and is ‘demanding’ to know what WCE’s intentions are for his failed company, in a letter he opted to send out to shareholders and social media platforms, rather than just the person it was directed to exclusively.

We found a copy.

I can’t speak for WCE, but I might suggest, when you’re a year overdue on your $11.5 million debenture, and you’ve blown through $50 million building a facility that isn’t operational, nobody is buying that debt assuming you’re the best person to run things going forward.

Intention #1: Har, you’re filing for unemployment.

Intention #2: WCE will take that facility off your hands.

I’m guessing again here, but one would think the lack of ‘reaching out’ by WCE speaks volumes. They didn’t fork out $5m because they thought HydRx would magically show up with the $11.5 million they owe and make everyone whole. They bought a $50 million grow facility for 10% of cost.

Pay your debt, or courier over the keys, Har.  

Grover had been working on a rescue deal with Rise Life Sciences (RLSC.C) and Canaccord, in which HydRx shareholders were going to receive $25 million for what WCE just bought for $5 million.

But the deal required Rise. which has been a horror show of its own making over the last year, and owes money itself, to raise $5 million to pay off Aphria.

They didn’t find the money. So that deal is done-zo and, likely, so is Rise itself.

Grover is right in that nobody is coming to his rescue. After accusing previous management of ’embezzlement’ before taking over the HydRx facility, team Grover managed to work through all the money left in the till, and do little to no completion work on the facility, while assuming someone with deep pockets would eventually ride in and make the save.

Nobody did. So now they’re in a tight spot.

Har, apparently, honestly believes only he can make the HydRx facility viable. So he’s demanding WCE forward him $600k immediately.

Let’s be clear – HYDRX OWES $11.5 MILLION to WCE.

But unless they send him $600k right now, he can’t even.

 

Again, I’m not in a position to speak for WCE, but if I were, I’d be telling them to empty the staff fridge, put their stuff in boxes, and go home. I’d tell them to leave the keys in the middle of the room and walk the fuck away.

HydRx management is a misnomer. The company has been mismanaged and gutted by people who are at best clueless and at worst egregious. They thought there’d always be a new mark to get money off, and that they could just keep using dollar bills for heating fuel.

But no. Aphria may have had no intention of taking over a small weed grow and thus let the debt roll too long, but WCE isn’t in the same boat. They’ll take your shit as soon as the sheriffs say it’s okay to enter.

And HydRx shareholders and board members need to understand they’re playing poker with an opponent holding a full house, while they’re sitting on two Uno cards, a 7/11 coupon, a dog-eared 1997 Brady Anderson baseball card, and an already filled out EI application.

— Chris Parry

FULL DISCLOSURE: World Class Extractions is an Equity.Guru marketing client.

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