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NEW YORK – Tilray Brands, Inc. (NASDAQ:TLRY), a company specializing in medicinal chemicals and botanical products currently trading near its 52-week low, has reached a settlement agreement regarding a securities class action lawsuit against its subsidiary, Aphria (NASDAQ:APHA), Inc. According to InvestingPro data, the company maintains a strong liquidity position with a current ratio of 2.54, indicating its ability to meet short-term obligations. The settlement, announced on Monday, resolves claims with an aggregate payment of CAD $30 million (approximately US $21 million).
The lawsuit, initiated in February 2019, involved allegations that Aphria misrepresented the value of assets acquired in 2018 and that certain insiders benefitted at the expense of shareholders. Aphria and the individual defendants have consistently denied the claims and defended against them. The trial was set to begin in January 2025.
Under the terms of the settlement, the Aphria Canadian Class Action (WA:ACT) will be dismissed with prejudice, meaning it cannot be filed again, and includes the dismissal of four individual Canadian lawsuits with similar allegations. The settlement does not include an admission of liability or wrongdoing by any of the defendants.
The Settlement Amount will be covered primarily by Aphria’s Directors and Officers (D&O) Insurance Policy and contributions from the individual defendants. Aphria is expected to cover the remaining unpaid portion, estimated at CAD $8.5 million (around US $5.9 million). This cost has already been accounted for on Aphria’s balance sheet and will not impact earnings negatively.
The settlement is subject to court approval, with a hearing scheduled for March 2025. The company has made forward-looking statements regarding the funding of the settlement and its anticipated non-impact on earnings, while acknowledging that actual results could differ due to various factors.
This financial update is based on a press release statement from Tilray Brands, Inc. and the information contained in their recent SEC filing. Looking ahead, InvestingPro analysis indicates positive momentum with expected sales growth and potential profitability this year. For deeper insights into Tilray’s financial health and future prospects, including 8 additional ProTips and comprehensive valuation metrics, explore the detailed Pro Research Report available on InvestingPro.
In other recent news, Tilray, a leading Canadian cannabis company, has faced mounting pressure due to President Donald Trump’s imposition of a 25% tariff on Canada. This tariff has raised concerns about potential disruptions in supply chains and increased costs for Canadian cannabis operators, including Tilray. In response to these developments, Jefferies analyst Owen Bennett has maintained a Buy rating on Tilray shares, despite recent sales figures falling short of expectations. Bennett attributes this to a strategic choice aimed at enhancing profitability.
TD Cowen also kept a Buy rating on Tilray shares but reduced the price target from $2.00 to $1.50. This adjustment comes after Tilray’s second-quarter earnings revealed a sales total of $211 million, falling short of the market consensus of $218 million. Despite this shortfall, Tilray’s management anticipates a rebound in the third quarter.
Tilray also reported second-quarter fiscal results that missed revenue expectations, with the company posting a revenue of $211 million, falling short of analyst estimates of $218.17 million. However, Tilray saw growth across all four of its business segments compared to the prior year quarter. These are recent developments that are shaping the future of Tilray.
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