Shares of Canopy Growth fall after announcement
Canopy Growth, a leading Canadian cannabis and consumer-packaged goods company, has announced its plans to raise $50 million from private investors in order to bolster its balance sheet. This move aims to further improve the company’s financial position, as well as provide working capital and support for general corporate purposes.
Financial Challenges Lead to Restructuring
In recognition of financial challenges, Canopy Growth recently disclosed that it would pursue bankruptcy filing for its BioSteel sports nutrition unit. This decision will immediately eliminate a significant cash burn for the company.
Private Placement Details
To secure the desired funding, Canopy Growth will be offering approximately 22.9 million units at a price of $1.09 each, raising $25 million. Additionally, the investors have the option to acquire an extra 22.9 million shares at the same per-share price, which would raise an additional $25 million.
Each unit will consist of one common share and one warrant. The warrant affords the holder the opportunity to purchase one common share at a price of $1.35 for a period of up to five years.
The news of this private placement has caused the company’s shares to decline significantly. As of 9:35 a.m. ET, shares were trading nearly 15% lower at 1.56 Canadian dollars ($1.15) on the Toronto Stock Exchange.