The trouble with secured debt, is that it puts certain creditors ahead of long term shareholders. James E Wagner Cultivation (TSXV: JWCA) shareholders learnt that process the hard way this morning, with it being announced that Trichome Financial’s (CSE: TFC) previously announced stalking horse bid was the winning bid for JWCA’s assets. The result, is that shareholders are expected to get nothing.

With Trichome’s initial bid being the winning bid on JWCA’s assets, it implies that there was no interest for James Wagner’s assets and its proprietary tech – at least, not at the price that Trichome had set. That base offer was set at $11.95 million, despite the company listing over $40.7 million in assets, of which $19.2 million was associated with property, plant and equipment.

With James Wagner having over $19.5 million in liabilities, the result is that shareholders are expected to get nothing with the sale of company assets – providing a lesson for all on the dangers of debt, with an emphasis on secured debt.

Trichome will now look to have its bid approved by the courts. Stoic Advisory acted as JWC’s advisor during the process.

James E. Wagner Cultivation last traded at $0.05.

Information for this analysis was found via Sedar, and James Wagner Cultivation. The author has no securities related to this organization. James Wagner Cultivation was previously a client of CanaCom Group, the parent company of The Deep Dive. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.