Shares in cannabis company Canopy Growth plunge after announced debt reduction plan
SMITHS FALLS, Ont. – The shares of Canopy Growth Corp. fell more than 30 percent after it announced it has signed deals with its secured and unsecured lenders to reduce its debt, but will issue 90.4 million shares plus new convertible debt to do so.
Shares in the cannabis company fell 30 cents, or about 35 percent, to 55 cents during morning trading on the Toronto Stock Exchange.
Canopy says the plan will help reduce total debt by about $437 million over the next six months and lower annual interest costs by about $20 million to $30 million.
Judy Hong, Canopy’s chief financial officer, says the agreements will enable the company to preserve cash and further improve its balance sheet through a significant and meaningful reduction in overall debt.
The company says it will repay approximately $193 million in existing bonds with a mix of cash, 90.4 million shares of stock and $40.4 million in new unsecured noninterest-bearing convertible bonds. Canopy will also reduce $100 million of debt under a $93 million cash payment credit agreement, with expectations of further capital reductions of 95 cents on the dollar upon completion of certain asset sales.
The company sold some of its facilities as part of an organizational transformation announced last year to help reduce spending.
This report from The Canadian Press was first published on July 14, 2023.
Companies in this story: (TSX:WEED)
