The Battle for Bophelo: Lawfare Looms Over Controversial Liquidation of Lesotho Flagship Cannabis Company
Nasdaq-listed Akanda is to challenge the liquidation of its Lesotho subsidiary, Bophelo Bioscience and Wellness, which was triggered by its ousted chairperson, Louise Mojela, a well-known South African entrepreneur. Akanda dismissed Mojela as executive chairperson on 23 June 2022 “on the basis of a lack of focus on profitability under her leadership”. Within weeks Mojela struck back by bringing the liquidation application before the High Court in Maseru with the co-applicant being the Mophuti Matsoso Development Trust (MMDT) which leases the Bophelo property to Akanda. Mojela is also the founder of the MMDT.
The liquidation order was granted on 15 July 2022 in the Maseru High Court by Honourable Justice Mokhesi. The Court appointed Cape Town lawyer Chavonnes Cooper as liquidator and to maintain the value of owned and managed assets during the process.
Akanda CEO Tej Virk has accused his former colleague of being a “bad leaver” and says the company is taking legal action to reverse the court order and to recover loans to the company and against Mojela.
The company issued a statement on 28 July 2022 saying it was appalling that Ms Mojela would take the extraordinary and significant action of seeking to cause Bophelo to be declared insolvent without consulting with, or obtaining the consent of, the Board of Directors or the senior management team of Akanda, which is the beneficial owner of 100% of Bophelo’s equity interests, or even of the full Board of Directors of Bophelo itself.”
“We therefore have reason to believe that Ms. Mojela’s actions reflect her efforts to retaliate against the Company in response to her dismissal and removal from the Board of Directors of Akanda on June 23, 2022, on the basis of a lack of focus on profitability under her leadership.”
Virk said “we intend to reclaim what rightfully belongs to Akanda shareholders, which includes the Akanda Bokamoso Empowerment Trust, which was established to support our hard working and loyal staff at the Bophelo campus in Lesotho. While doing so, we remain committed to our mission of helping people lead better lives through improved access to high quality medical cannabis products.”
Bophelo, a 200 ha, an EU-certified licensed cannabis cultivation facility 70 km from Maseru, was originally founded by by Mojela in 2018. She sold the business to Canada’s Halo Collective in for R70 million in 2020 and became Halo’s non-executive chairman. Halo restructured its non-American assets last year, in terms of which, the ownership of Bophelo and UK-based CanMart (a pharmaceutical distributor) were taken over by a new entity, Akanda. Halo Collective retains 40% ownership of Akanda.
Akanda was listed on Nasdaq on 25 March, raising about US$20 million. In May 2022, Akanda bought licensed Portuguese cultivator Holigen to complement Bophelo, but behind the scenes, it was getting nasty. Within two months of listing, Akanda’s share price had dropped by 90%, precipitating a boardroom blow-out in June. Angry shareholders lost their faith in management and the entire Akanda board was sent packing on 23 June 2022.
CEO Tej Virk was the only survivor of the purge and has been tasked with turning the ship around. The impending legal drama over Bophelo will have an awkward personal dimension: Mojela and Virk worked very closely together conceptualising Akanda and the concept of “ethical sourcing”. Now they have found themselves on opposing sides in the ‘Battle for Bophelo’.
According to Akanda, Bophelo completed its first harvest in May 2022 and has been losing an estimated US$2 million a year for the last few years. It was to receive US$2,5 million to construct a 2,5 acre Cravo green house for next year’s season.