Just days after revealing it received a warning from the New York Stock Exchange last month about its low stock price, Gatineau cannabis producer Hexo says it’s planning to raise $50 million in an underwritten public offering.
Hexo (TSX:HEXO) says a group of underwriters led by Canaccord Genuity Corp. and Canaccord Genuity LLC have agreed to purchase 55.6 million units, each consisting of one common share and one purchase warrant for an additional half-share that can be exercised within the next five years. The price is 90 cents per unit.
The underwriters also have a 30-day option to purchase up to an additional 8.34 million units under the same terms and conditions.
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The Ottawa Hospital’s Campaign to Create Tomorrow enters important next phase
For Ginger Bertrand, some of her earliest childhood memories in Ottawa are centred around healthcare. “I grew up across the street from what was originally the General Hospital,” she explains,
The Ottawa Hospital’s Campaign to Create Tomorrow enters important next phase
For Ginger Bertrand, some of her earliest childhood memories in Ottawa are centred around healthcare. “I grew up across the street from what was originally the General Hospital,” she explains,
The pot producer said in a statement it plans to use the funding for working capital and “other general corporate purposes.” The offering is expected to close later this week.
The move comes as Hexo struggles to maintain traction in the Canadian cannabis market.
Last week, the company said it received a warning from the NYSE on April 7 that it was in breach of the exchange’s listing standards after its shares had fallen below $1 for 30 consecutive trading days.
Hexo has been given until Dec. 16 to reach an average trading price of at least $1 for a 30-day period and regain compliance. If the firm does not meet the trading standard by then, its shares will be delisted.
In a statement last week, Hexo said it is “considering options to regain compliance, which may include a share consolidation.” On Tuesday afternoon, Hexo’s shares were trading at just 53 cents on the NYSE, down 22 cents from a day earlier, and had dropped three cents to 73 cents on the Toronto Stock Exchange.
Previously, CEO Sebastien St-Louis told analysts in late March the global COVID-19 pandemic “presented significant challenges” for the Gatineau company. But even before the pandemic began to batter the Canadian economy, Hexo was facing a tough road ahead.
Although the company reported a 17 per cent bump in net revenues in the second quarter compared with a year ago, it also posted a net loss of $298.2 million. The losses were largely connected to a one-time impairment charge of $138.3 million from the closure and impending sale of the company’s Niagara production facilities, acquired through the firm’s $263-million acquisition of Newstrike Brands last year.
