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Geronimo Capital founder and TPCO Holding Corp. (OTCQX:GRAMF) shareholder George Allen sent a letter to the TPCO explaining why he thinks the deal with Gold Flora is not in the best interest of TPCO shareholders, reported Green Market Report.
TPCO and Gold Flora announced a definitive business combination agreement to combine the companies in an all-stock merger in February. Under the terms of the agreement, TPCO shareholders will own approximately 49% and Gold Flora holders will own approximately 51%, of the outstanding common equity of the combined company on a pro forma basis upon completion of the transaction.
Allan noted that the transaction will trigger change-in-control, which would cause a windfall of cash and stock awards for the management. This made him ask whether the board and management are truly acting in the best interest of shareholders or themselves.
Allen stated in the letter “Following the transaction, TPCO shareholders are poised to own a dramatically diluted ownership (42%, not 49%) position in a company that has very little remaining liquidity and a cash burn that likely puts them out of business in very short order if they are unable to secure more capital.”
The Parent Company stated in the response to the outlet: "Mr. Allen's opinion is subject to extreme bias due to his deep involvement with a California cannabis competitor. Furthermore, there is a significant irony in his criticism, considering his recent completion of a non-arm's length transaction that severely undermined the viability of the very same California cannabis competitor. We strongly refute George's baseless allegations and retain the right to pursue all available legal avenues to challenge unfounded and irresponsible claims. Shareholders seeking further insights into the advantages of this merger are encouraged to review the details outlined in the circular."
Read more on Green Market Report
Photo: Benzinga edit with photos by Matthias Zomer on Pexels, squarefrog on Pixabay
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