Sunniva (CSE: SNN) President resigns over personal reasons
QUESTION: “I am a large shareholder of Sunniva (CSE: SNN) (USOTC: SNNVF) owning over 100,000 shares. After the recent interview with Dr. Holler in your newsletter I grew more confident management was about to reset and be on track for a healthier 2019. Today we got news that Leith Pedersen, the President, is resigning for “…personal reasons.” I feel we can’t get a break lately. What are your thoughts regarding today’s news? Is it worrisome in your mind that the co-founder and President is stepping down just before the first quarter financial report and the completion of the California facility?”
Mook from Montreal, Quebec
ANSWER: I was also caught off guard by the announcement as I had no hint such a change was forthcoming. As a result, I dropped everything and called Leith. I’ve met and interviewed Dr. Anthony Holler, CEO and Dave Negis, CFO but Leith has been my “go-to” person for information on Sunniva. As a result, given the term “personal reasons,” my initial concern was a personal one and I was relieved to hear he did not have a serious medical condition although he expressed feeling quite tired as he had been down with pneumonia for two of the last three months.
Leith and I continued with a discussion that I was aware of but had never raised with him in the past, that is, he is not a cannabis company, operational President.
Leith said as a co-founder and former stockbroker, he was better suited to fulfill a valuable function with a company in its earlier stages – dealing with the capital markets and investment community. His skill set is more useful to a company in the start-up phase of operations and SNN has moved past that point and is now a full blown, operating company. So there had been some discussion about management changes that involved Leith with the focus of the business now on California and the actual announcement hadn’t been planned this way but the timing of events doesn’t always work out as you expect.
SNN was facing the deadline of issuing its documents for the Annual General Meeting so it was decided to make the announcement now as this change would soon be evident by other developments at SNN and with their key focus now on California.
What, if anything, does this portend? In talking to other people in the business who are aware of SNN, my expectation is that the company is not about to be taken over. My sense is there is too much unrealized value inherent in the stock price today and a long awaited growth spurt is now very close to getting underway. On the other hand, it wouldn’t surprise me to see the addition of senior operating management with expertise in the operation of a growing cannabis company, probably with experience in California and the U.S.
Of course, a change like this is never the result of just one thing. I can attest to the fact that for Leith, the job of President was 24/7/365. I have talked to him professionally at 5:30 in the morning and 11:00 at night. We have spoken frequently on weekends and sometimes on statutory holidays. So Leith says he is looking forward to having more personal time to spend with his family, especially his three year old son.
From Leith’s point of view, the past year and a bit has been stressful as SNN’s stock performance has been disappointing but he feels to do something right it always takes time and the key infrastructure for growth is now in place. As the publisher of the Let’s Toke Business newsletter, I couldn’t reprint some of the comments I have received about SNN and the stock price over the past year. But I’ve been doing this for a long time and I’ve grown a thick skin. Also, at any given time I’m covering between five and ten different companies and if I’m any good at all, I will always have a Khiron Life Sciences (TSXV: KHRN) or a 1933 Industries (CSE: TGIF) to talk about and there is always a Cannabis Growth Opportunity Corp. (CSE: CGOC) that can be added. Companies with positive stock price performance with generally satisfied investors. But if you’re working for one company, it can get relentlessly worse before it gets better. In Leith’s case, he also has a pre-existing condition and recently the stress and a five year endless workload probably caused this serious but non-life threatening health issue.
Our conversation concluded with Leith’s sincere assurances that nothing regarding his resignation was motivated by any expectation of problems in the operations at SNN. He expects a flow of results following the general outline described by Dr. Anthony Holler in his interview with me on these pages edition 266, Let’s Toke Business May 10, 2019.
Conclusion: I am sorry to see Leith Pedersen resign but I am sure we will remain in touch moving forward. But the market is ruthless and often coldly non-empathetic. So the question is always, “So what’s next?” If the answer is better, the stock will go up and if it’s not, the stock will go down. I believe that if I’m correct and individuals experienced in cannabis operations especially in California come on board, it will be seen as better. So in addition to waiting to hear about the sale of the Canadian assets, the sales of Sunniva branded products in California and progress at the Cathedral City grow facility, I believe we can anticipate new additions to the senior management team based out of California. I’m not ruling out an SNN takeover. I just don’t think it would be related in any way to Leith’s change and it seems an odd time to be selling.