Fun little complaint to read about $SNDL that creates doubt on how good $SNDL “discount to book” really is because the value of its book may be radically overstated…A few thoughts:

1. $SNDL Sunstream storyline is that they’re a lender but that they will also combine their distressed loans into a new MSO that will be amazing and that shareholders are getting for basically free in the valuation.

But this lawsuit alleges that $SNDL wasn’t really acting as just a lender to SkyMint - they were in operational control long before SkyMint officially failed and it was $SNDL management mistakes that contributed to the decline.

The allegations here strike me as pretty credible - they match up with much of my experience in this industry.

2. When I first looked at $SNDL, it seemed clear to me that their whole “JV” arrangement with SAF group was a way to tell NASDAQ “We don’t have sufficient control over this loan book so we are just passive and we comply with all the plant touching ownership/loan rules and oh by the way we don’t have to disclose anything because we are just passive.” And that it was total bullshit and left out material information shareholders need to know - like, for example, WHAT SAF IS BEING PAID. 

The related party allegations here - that $SNDL CEO has some hidden interests - unfortunately strike me as realistic here too.

All this combined should make $SNDL shareholders ask for some clearer disclosure and answers

Some other random notes:

1. SkyMint CEO Jeff Radway had multiple affairs allegedly, including some that got settlements. I looked at his photo and have never seen a man with narrower eyes that had success with the ladies, so hats off to him for making it work.

2. One of Merida’s allegations is that SkyMint provided IFRS financials instead of GAAP, that Merida didn’t realize it and had they realized it they would have not done the deal. Not sure why they threw this allegation in here (the later restatement stuff reads a little better but the restatements allegations don’t do a good job showing the restatements were really material) because it’s a fucking howler. Uh yeah…sophisticated long time cannabis PE firm is felled by…IFRS financials?
#SNDL #SNDL #SNDL