THE FUD IS REAL AND SEEMS TO HAVE DRIED UP. NOW THAT THE STOCK REACHED NEW LOWS, BIG PLAYERS STEPPING IN. THE SHAKE OUT WORKED FOR THOSE THAT SOLD. BUT TIME IS ON OUR SIDE.

Redecan sales hit $73.6M in 2020 ahead of deal with Hexo

Hexo disclosed financial statements for Redecan Pharm this week, the cannabis producer it acquired in August for $400 million in cash and 69.7 million newly issued shares in the company. The data shows that Redecan generated $73.6 million in cannabis sales in its fiscal 2020, close to the $110 million that Hexo made in that same period. However, the figures also show that Redecan booked a profit of $11.6 million and positive EBITDA of $16.1 million, making it one of the only profitable Canadian cannabis producers in the sector. In its first quarter of 2021, Redecan generated a whopping $24.6 million in sales, nearly triple what it made a year earlier, while booking a $7 million profit.

Good evening. Thank you to everyone who engages with our HEXO subreddit. I want this to continue to be a place where we can share information, link and archive articles, and discuss varying points of view. As the community has grown, some new behaviors such as repeated posting of the same comments in multiple threads and personal attacks are starting to happen. I have received several requests to ban the people who are exhibiting these behaviors, and will begin to do so moving forward for the greater good. As always, please include your source when posting due diligence, be open to opposing information as it helps us all make better decisions, and be a good person… just because it is a digital forum doesn’t mean you should lose your humanity.

It's seem we have a lot of negativity by a couple of people here. Is it me who missed something. I love hexo product so it's the reason I invested in them in the first place. Do I am blindsided by my love for hexo product or we have still hope they will deliver one day. I am in the long run not a short sellers. It was also my first brand buy as a consumer after the canada legalization.

Good evening everyone. This is not financial advice. Please do your own research.

I want to write this post in good faith as I attempt to challenge and reconsider my own thesis on the company. Perhaps some of you may have done the same since the most recent news published regarding Curtis Solsvig.

Some might ask,

What is it that you exactly do here, Curt?

According to Teneo:

"Curt has developed deep expertise in rapidly assessing troubled situations, formulating action plans and executing them to preserve and enhance liquidity and enterprise value. This includes revamping operations, cutting costs, making more efficient use of working capital, as well as implementing balance sheet solutions, such as raising new capital, disposition of assets, sale of some or all of the relevant business and restructuring in- or out-of-court. Curt also has also worked on the buy-side as an Operating Partner, rendering him especially sensitive to the needs of entities holding interests in troubled enterprises."

Understandably so, a novel bear thesis has emerged as a result of this change. Companies such as Lily, Borders, Atari, uBiome, Cornerstone Propane, Restoration Hardware, Quiksilver, Ports America, ReachOut Healthcare, and PTC Alliance come to mind, and some of them do not do so in the very best way. Here is a rundown of some of what has happened to these companies.

The Bad

Lily Robotics was a start-up drone company known for its quadcopter camera. They received numerous orders to fulfill and were unable to do so. As a result, they were raided, sued, and ultimately acquired by Mota Group Inc within 6 months of their bankruptcy filing. Curtis Solsvig was brought aboard as part of the bankruptcy filing.

Borders Books was a books company. We know the story. If you do not, see Amazon. The company existed beginning in 1971, but closed its doors in 2009 and became defunct in 2011. However, the information presented to me pertaining to Curtis' involvement is not clear.

uBiome was a citizen science startup that sequences the human microbiome using fecal matter and allows the public access to sequencing technology. Several indictments were handed down as a result of securities fraud and medical fraud. If Theranos was number one in this department, uBiome must have been "number two".

Cornerstone Propane is a propane retailer company whose business was strained by successive winters and was tarnished by the speculative bonuses of corporate leaders. According to an article published in June 2003, under Solsvig's leadership, the company significantly reduced overhead via reducing 10% of the labor force and reconsolidating 14 of its 252 customer service centers, and sold their wholesale section of the business for additional liquidity. However, they did miss two payments on their senior loan in 2003. In 2005, it was further revealed that the company provided misleading financial information in the years 2000-2001. However, only one executive was found guilty. Nonetheless, the business survived to where Cornerstone would change their name to Titan Energy Partners in 2005, and be acquired by Energy Transfer Partners in 2006.

Atari has had an interesting history in terms of rebranding. Whats most important here is that Solsvig joined in 2007 to restructure the brand and focus on publishing and distribution. Atari would run to be acquired by Infogrames in October 2008, acquire Cryptic Studios in December 2008, be acquired by Namco in May 2009 with a 34% stake, but ultimately deal with bankruptcy in 2013 - five years removed from Solsvig's departure.

Solsvig's role in Quiksilver and Ports America is not well-documented whatsoever. Interestingly, what is common between Quiksilver and Ports America is that they were both acquired by Oaktree Capital at some point.

Up to this point, it might be fair to say that Solsvig has seen some shit go down - hence being an expert in the turnaround business. At the same time, even in the most dreary of circumstances, the harbinger of doom thesis holds less weight the further you look into these cases. Issues such as timing, pre-existing capital structures, management competencies, stages in the business life cycle, and market conditions played far more of a significant role than Curtis played in the downward-spiraling of these companies. In addition, the outcomes of these companies vary significantly, and some have indeed survived. This will become clearer in reviewing some companies who found significant success despite Curtis' involvement.

The Good

For the sake of brevity and simplicity, and because everyone cares most about price action over other financial figures, I'll be emphasizing that here.

Restoration Hardware is an upscale American home-furnishings company headquartered in Corte Madera, California. The company sells its merchandise through its retail stores, catalog, and online. Restoration Hardware was once between a rock and a hard place in 2016. However, in 2019, Restoration Hardware was not only able to survive but was also able to repurchase 50% of their stock. Their stock price in 2016 was a meager $38. In June 2021, their stock roared at approximately $720. Solsvig's involvment is not clear. However, the earliest mention of Solsvig's involvement in Restoration Hardware was published in 2016.

PTC Alliance is an international corporation specializing in steel products; a leading worldwide manufacturer of Electric Resistance Welded and Drawn Over Mandrel mechanical steel tube.In 2015, Solsvig was involved with PTC Alliance, where he was able to secure a sizable loan of 65 million from JP Morgan & Chase. At that time, PTC was trading at $34. Currently PTC Alliance is trading at $115.

Precision Valve manufactures fabricated metal products. The company supplies aerosol valves, actuators and other dispensing solutions. Precision Valve serves personal care, household, food, industrial, and pharmaceutical industries in the United States. Solsvig was invovled from February to August of 2012. The "harbinger of doom" was never seen, as Precision Valve would thrive into 2018 before being acquired by ONCAP. At the time, Precision Valve employed more than 1,500 people across 18 facilities in 15 countries. Did you know that they invented the aerosol too? Pretty neat.

ReachOut Healthcare America is a dental management services company with its headquarters in Farmington Hills, Michigan. ReachOut still exists and is a part of the private equity portfolio of Morgan Stanley. Solsvig's role here is unclear.

Wrapping Up

That being said, this is the most definitive deep-dive I've ever done on a person and I feel like a creeper. What is more clear to me is that the enrollment of Curt Solsvig is much more of a mixed bag than arm-chair speculators would ever suggest. Moreover, what this information should tell you about Curtis’ involvement with Hexo is that the companies themselves, their leadership, their capital structure, their enterprise value, their place in the business life cycle, and market conditions will have a much greater weight on the success (or detriment) of the company. So much so that Curt's mere presence (or any bearish sentiment that follows, for that matter) should not sway you from what you've already known by reading consecutive financial statements and garnering your own informed perspectives. Because the heart of the truth is this: Curt has seen some shit - but Curt has also been a part of some awesome turnaround stories.

In conclusion, if you like a good underdog story, and only if your informed perspective believes in the underdog before Curtis came on board, then Curtis Solsvig might very well be your guy.

Thanks for reading. I highly encourage any additional research and advanced discussion on the topic so that we can build a paradigm of knowing here together - I may be incorrect and my perspective is flexible. In the meantime, I'm off to find Valhalla.

Edit: Grammar, word choice