I took a 10 minute glance at this.Looks like Eurocann owes...

I took a 10 minute glance at this.

Looks like Eurocann owes Auscann about $9m. Auscann also have $2.5m in the bank. Let's say Auscann is only worth the cash in bank and lent out so $11.5m all up. If that makes up 25% of the combined entity then they are placing a $34.5m valuation on Eurocann (the other 75%).

Quick look at the last annual report available for Eurocann (December 2022) paints a business in financial distress, losing millions per year (hence the need to borrow from Auscann). Their net assets also weren't worth $34.5m. Since December 2022 the Eurocann financials clearly haven't improved which is why Auscann wrote down $6m as bad debts in their recent half yearly.

So... why not just recall the funds and if Eurocann can't pay push them into bankruptcy and takeover the assets giving existing Auscann holders a larger stake? As always need to look at who the losers would be in that scenario and one of them would be Andrew Chapman (AC8 Chairman) who holds hundreds of millions of shares in Eurocann and I believe also lent $1m to them (which may have been paid back by now). If this goes through he ends up with a large slice of the combined entity while Auscann shareholders get a small slice. If the other scenario I mentioned above takes place he might get something for his $1m loan as a creditor but probably nothing for his shares while Auscann shareholders will be the main beneficiaries.

It will be interesting to read the full details when they come out including any independent valuers report and conflict of interest info.