RE:RE:RE:RE:RE:Redecan a $500m+ theftI know the answer to how this all happened.
Sebastien ran an organization where he was the sole authority, and everyone obeyed his every command. The only other power with the organization is the only person who has survived all of the purges: the General Counsel, Roch Vaillaincourt.
Sebastien became convinced that being biggest would mean trading at a much higher multiple of revenue. He was convinced that Hexo was massively undervalued on a revenue multiple basis, and that this was unfair. When he proposed each of the acquisitions, his investment bankers were happy to agree with him and assure him of his brilliance while they considered everything they could do with all of the fees they were about to earn.
Sebastien, and the board, were convinced that the share price would trade up to $20 per share by acquiring Redecan and being number one in market share. Their investment bankers told them that they would definitely trade at a significantly higher multiple because of the deal. On that basis, the Secured Note deal appeared to be a no-brainer to them, because their share price would double and they could pay down the note directly in the market at a way higher price. There was no concept or awareness of any principles of risk management from Sebastien, the board, or anyone around them.
After completed the Secured Note deal, which is clearly convertible, one of the members of the board even remarked in an external conversation that they had not done a convertible offering. That was the level of obliviousness.
People look out for themselves, and most people are terrible at understanding their blindspots. Even after every single one of his prior failures for being insanely optimistic and demonstrating terrible judgment, Sebastien still never recognized this in himself. Lawyers, bankers, and accountants do not save you from bad business judgment. Boards can. But they at least need to understand the situation to be able to help. This one was clueless.