An investor in Hexo Corp. is setting the stage for a proxy fight by saying he will nominate five independent directors to the company's board at an upcoming shareholders’ meeting as he seeks to reverse the pot giant's stock slide.

Adam Arviv said in a statement Wednesday evening that the boardroom changes are needed because the company's current board was "grossly remiss" in approving several financings used to fund acquisitions, which he said caused the company to be in "severe financial distress."

Hexo - currently Canada's largest cannabis company by market share - is also allegedly running short of capital to handle day-to-day operations and could be at risk of potentially filing for bankruptcy, Arviv said.

"This has to stop. The market has spoken loudly and Hexo shareholders have made it clear that they have no confidence in the direction of the company and in the ability of the incumbent board to right the ship and reverse the downward slide," he said in the statement. "Without monumental change, Hexo shares will continue their unrelenting descent."

Arviv, who said he owns about two per cent of Hexo's stock, previously served as an advisor to the family behind Redecan Pharm, the Ontario-based pot producer that Hexo acquired in May for $935 million in a cash-and-stock deal.

Arviv previously sent a letter to Hexo's board in September demanding the resignation of then-Chief Executive Officer Sebastien St-Louis due to "poor financial performance," and is currently the CEO of Bragg Gaming Group Inc., a publicly-traded online betting company. He also controls Kaos Capital Ltd., a Toronto-based investment firm, which owns the majority of Arviv's holding in Hexo, according to the statement.

A Hexo spokesperson told BNN Bloomberg the company is reviewing Arviv's board nominations and is also preparing its own board composition recommendations ahead of its annual general meeting.

"It is disappointing that Mr. Arviv has decided to proceed with this unnecessary, disruptive and expensive approach rather than continuing working with the company in a normal course," the spokesperson said in an email.

The spokesperson added that Hexo's management will continue to focus on its strategic plan to reduce costs and become cash flow positive while maintaining a leading market share position.

"[Wednesday’s] actions by Mr. Arviv serve as an unhelpful distraction," the spokesperson added.

Hexo's stock has plunged 91 per cent over the past year and has slid significantly since the company secured a US$145-million underwritten public offering in August, shortly before the Redecan deal was scheduled to close. Arviv also noted that the company's at-the-market equity program as well as a senior secured convertible note that raised US$359 million in May also caused a "precipitous decline" in Hexo's share price.

"Shareholders of Hexo deserve leadership that can deliver a tangible future," Arviv said. "Despite the necessary removal of St-Louis, it is very clear that to reverse course, the majority of the board needs to be replaced with new, independent directors who have the experience and expertise to successfully navigate back to exceptional performance."

In addition to nominating himself, Arviv has proposed that Nocera Investment Corp. Director Mark Attanasio; Building Union of Canada President and former Toronto police officer Craig Bromell; Brown Lab Industries Inc. President Rob Godfrey; and Aidan Rasalingam, a cannabis retail executive, replace five current Hexo directors.

Those names will be submitted for election at Hexo's annual meeting on March 8. Arviv claimed in his statement that he will have "significant" shareholder support for his proposed board slate and if the directors are appointed, he plans to establish an independent committee to "evaluate all paths" in resolving the company's financial performance.

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