NSE firm founder’s bid for Canadian company flops

Mr Carl James Esprey, the Italian whose Kenyan company -- Atlas African Industries -- disappeared after raising more than Sh450 million from local investors, has suffered a setback in his plans to venture into the marijuana trade in Zimbabwe and Lesotho.

Mr Esprey has flopped in his bid to acquire a Canadian-listed company, Trius Investments Inc, through which he intended to trade in marijuana in the southern African countries that have already legalised growing of bhang for medical use.

African Cannabis, a company jointly owned by Mr Esprey and Mr Kojo Annan, was to be used as the investment vehicle to buy out Trius Investments Inc, a Canadian property investment and garbage collection firm. Mr Kojo Annan is the son the late Kofi Annan, a former UN secretary-general.

Had it been successful, the reverse takeover would have seen Mr Esprey’s medical marijuana business listed on the Alberta-based TSX Venture Exchange.

The deal, which coincided with a major rally in pot stocks in Canada, was meant to be completed this month but Trius has terminated the transaction after African Cannabis breached unspecified clauses of the merger agreement.

“Trius Investments Inc. announces that effective January 10, 2019, it terminated its letter of intent, as amended, for a proposed reverse takeover by African Cannabis Corp, and has been paid a break fee of $250,000 (Sh19 million),” the company said in a regulatory filing.

In mergers and acquisitions, a break fee is usually paid by a party if it pulls out of the deal or breaches pre-specified terms.

New opportunities

Trius, whose stock resumes trading today, said it will continue searching for new business opportunities “that can deliver value and liquidity for its shareholders”.

The collapse of the deal marks a major setback for Mr Esprey, who had also moved to raise Sh1.5 billion (20 million Canadian dollars) in a private placement in Canada, with plans to use the funds to bankroll production and export of medical marijuana.

African Cannabis says it is holding a medical cannabis licence in Lesotho and has entered into a joint venture with a Zimbabwean State-owned company to obtain a licence in that country.

In 2017, Lesotho became the first African country to legalise the cultivation of marijuana for medicinal purposes.

It was followed by Zimbabwe last year, with other countries said to be considering making similar moves.

Mr Esprey’s new venture comes despite failure to resolve troubles of the failed Atlas African Industries.

Atlas raised Sh450.1 million in a private placement from Kenyan investors in 2014 when it listed on the Nairobi Securities Exchange (NSE) where it debuted with a market capitalisation of Sh4.9 billion.

Besides participating in the private placement, Kenyan investors also bought shares after the listing but suffered heavy losses when the stock price collapsed from the initial Sh11.5 to Sh1.05 by the time it was suspended from trading in May 2017.

After closing the Kenyan operations, Atlas tried its hands in diverse sectors and countries before literally disappearing with no communication to shareholders.

Glass bottle plant

The company ventured into Ethiopia where it said some $2.4 million (Sh244 million) earmarked for building a glass bottle-making plant was illegally seized by Ethiopia’s tax authorities, forcing it to shut down.

It then invested Sh50 million to acquire a minority stake in BonanzaWin, a Nigerian gaming company, marking its last publicly disclosed activity in Africa.

Mr Esprey’s handlers have told the Business Daily that the company’s woes have been communicated to shareholders.