Aurora Files New Offering, Does Reverse Split To Avoid NYSE Delisting

Apparently a cash cushion of $200 million isn’t enough for Aurora Cannabis Inc. (NYSE: ACB) as the company files a new offering sending the share price even lower. The company confirmed that it has $250 million in cash as of March 31, 2020.

On Monday, Aurora said that it intends to file a new prospectus supplement for a renewed ATM (At-The-Market) program, to enable Aurora to raise additional equity capital under which approximately $350 million remains available. The company said it plans to use a portion of this available capacity to provide further balance sheet strength and preserve flexibility given macroeconomic uncertainty caused by COVID-19.

“Our focus today continues to be on financial discipline across the entire organization.  We are taking appropriate actions to strengthen our cash position and maintain financial flexibility as we navigate through the current environment,” said Michael Singer, Executive Chairman, and Interim CEO. “As Aurora drives towards generating positive free-cash-flow, we are confident that our shareholders will be supportive of our further actions to solidify our balance sheet and position the Company for success.”

12 For 1 Reverse Split

The company also said in a statement that it plans to consolidate all of its outstanding common shares on the basis of 1 Common Share for every 12 Common Shares currently outstanding effective on or about May 11, 2020. The reverse split comes right after the company just did an offering and issued more shares whipsawing investors. However, it seems the company had no choice as last week, it received notification from the NYSE (New York Stock Exchange) that since the share price fell below an average of $1.00 for a consecutive 30 trading-day period, it is not in compliance with one of the NYSE’s continued listing standards.

Aurora hopes that by doing a reverse split it can jack up the price per share in order to remain at the NYSE. The company has 1.3 billion shares outstanding, which were selling at 81 cents in early trading. This was a 7% drop after today’s announcement.

Outlook

Aurora reaffirmed its previous forecast that fiscal Q3 2020 cannabis net revenue is expected to show modest growth relative to fiscal Q2 2020. Last quarter the company reported that its total net revenue fell 26% sequentially to C$56 million in the second quarter from C$75 million in the first quarter of 2020. Medical cannabis net revenues decreased 10% sequentially to C$27.4 million due to a short-term permit issue in Germany that has since been resolved. Wholesale bulk cannabis net revenues fell from C$10.3 million in the first quarter to C$2.4 million due to overall volume declines and the wholesale of lower potency (priced) product. The company did not state why it expected modest growth.

 

 

Debra Borchardt

Debra BorchardtDebra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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