Aurora's Price Keeps Dropping For Bought Deals

Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB) shareholders were not pleased with the additional dilution due to the company’s decision to enter into an agreement with a syndicate of underwriters led by Canaccord Genuity and BMO Capital Markets, under which the underwriters have agreed to buy on bought deal basis 51.1 million units of the company, at a price of $2.45 per Unit for gross proceeds of approximately $125.2 million.

The net proceeds of the offering will be used for general corporate purposes and the closing is expected to take place on or about June 1, 2022.

Previous Financing

In October of 2020, Aurora filed an offering to raise $500 million. At that time, Aurora already had over 120 million shares outstanding and 19% of those shares were shorted – meaning those traders are betting the price per share will fall. As of February only 10% of the shares are shorted. With the completion of the previously filed ATM program, Aurora said it currently has available cash resources of approximately $272 million, in addition to an undrawn revolver capacity of approximately $11 million.

On January 26, 2021Aurora closed its bought deal public offering of units for total gross proceeds of $137.9 million. The company sold 13,200,000 units at a price of US$10.45 per Unit, including 1,200,000 Units sold pursuant to the exercise in full of the underwriters’ over-allotment option. The prices have fallen dramatically with each unit now selling for $2.45.

In October of 2020, Aurora filed an offering to raise $500 million. At that time, Aurora already had over 120 million shares outstanding and 19% of those shares were shorted – meaning those traders are betting the price per share will fall. As of February, only 10% of the shares are shorted. With the completion of the previously filed ATM program, Aurora said it currently has available cash resources of approximately $272 million, in addition to an undrawn revolver capacity of approximately $11 million.

A couple of weeks ago, Aurora announced its financial results for the third quarter of fiscal 2022 ending March 31, 2022, as total cannabis net revenue fell 17% sequentially to $50.4 millionAurora recorded a number of one-time non-cash charges in the quarter of $741.7 million, asset-specific impairments of $176.1 million, and an inventory provision charge of $63.6 million.

 

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