You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.
During the quarter, it repurchased C$7.1 million at a discount, and the company used the proceeds from its ATM to get more aggressive, disclosing that after the quarter it purchased another C$13.4 million of debt at a steep discount.
Given that the company is experiencing a decline in revenue as it continues to generate large operating losses, we think that Aurora is prudent to sell shares in the market above tangible book value, especially in light of the situation at HEXO Corp.
We recently discussed the challenges at Canopy Growth and its deteriorating financial position.
If analysts are correct in their outlook that Canopy Growth won’t reach positive adjusted EBITDA until three years from now, the ability to refinance the debt will be increasingly questioned.
This debt includes two convertible notes: $278 million due in 2023 and $260 million due in 2024 unless they are able to borrow more.
When we interviewed its CEO, Irwin Simon, last August, he expressed hope that the company would see its 2024 debt converted into stock, but its stock has declined from $14 to $6 since then.
While the stocks of all three companies are down substantially from where they have been historically, biting the bullet to strengthen the balance sheet may be necessary to restore investor confidence.
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