HEXO Corp. (NYSE:HEXO) wants to change its plan on consolidating its shares to a four to one ratio from eight to one since its share price has risen. Hexo is consolidating its shares in order to meet the compliance standard of $1.00 per share for the New York Stock Exchange.
The company said it believes the original consolidation ratio should be revised downward in light of the recent increase in the trading price of the common shares and in order to maintain a liquid share float and reflect the company’s confidence that it can execute on its growth strategy. It has made an amendment to its notice of meeting dated October 28, 2020, and its management information circular dated October 28, 2020, in respect of its annual and special meeting of shareholders scheduled to be held on December 11, 2020.
“We believe that our solid financial position and the execution of our growth strategy is not yet reflected in our market valuation. We are number one in Canada in key categories such as beverages and have continued to gain sales momentum in critical markets including Ontario and Alberta. We are currently sitting fourth in recreational cannabis sales in Canada, with the gap between us and third place narrowing, while the gap between us and those behind us has widened”, said Sébastien St-Louis, HEXO CEO and co-founder. “Given the necessity to regain compliance with the US$1.00 minimum share price continued listing standard, we are in the position of having to seek approval for the consolidation to avoid de-listing from the NYSE. It is important to maintain liquidity for our investors, and we’ve made the decision to consolidate our shares. This change in the consolidation ratio to 4:1, from the previously announced 8:1, is indicative of the confidence we have in our ability to execute going forward, as we look beyond positive EBITDA to earnings on a per share basis.”
The shares have traded at roughly a price 70 cents per share, but shares recently popped over $1.00. Hexo plans to release its financial results for the fiscal first quarter of 2021, before market hours on December 14, 2020, as well as host a webcast for investors beginning at 8:30 a.m. EST.