Cannabis Weekly Round-Up: Aurora Gives Executive the Boot

During the past trading week (December 23 to 27), a prominent C-level executive was dismissed from his role at one of Canada’s largest cannabis companies.

Another Canadian cannabis firm saw a massive value drop on its announcement of a US$25 million registered direct offering, which will dilute the value of its existing shares.

Here’s a closer look at some of the biggest cannabis news over the week.

Aurora Cannabis dips during volatile week

In a sudden move, one of Aurora Cannabis’ (NYSE:ACB,TSX:ACB) more front-facing executives, Cam Battley, “stepped down” from his role as chief corporate officer, the company announced, ending his three year stint with Aurora.

A news release sent out last Saturday (December 21) was followed by a 6.4 percent drop in Aurora’s share value in Toronto on Monday (December 23).

The slump continued across the week, and the company opened at C$2.55 on Friday (December 27), its lowest point year-to-date.

While Aurora did not mention the specific reason for Battley’s shift, the company confirmed he gained a role as a member of the board of directors for privately held medical cannabis company MedReleaf Australia in November. Aurora holds a 10 percent stake in this venture, as well as 50 percent voting rights.

In the statement, Aurora CEO Terry Booth congratulated Battley on his work with the company. “We are grateful for Cam’s leadership and passion over his many years with Aurora. I am sure Cam will be successful as he moves on to tackle Australia,” he said.

Things took another dramatic turn, however, when it was revealed that Battley was asked to step down from his role. In an emailed statement to the Canadian Press, it wasn’t made clear why Battley was let go, but Aurora did say the move was a part of its effort to restructure its leadership strategy.

The rocky week continued for Aurora after The Coca-Cola Company (NYSE:KO) ended speculation that it plans to enter the cannabis market.

After the release of a since-deleted YouTube video in which a user claimed the firm was looking to launch a line of cannabidiol-infused Coca-Cola drinks in Canada, the company said it has no plans to throw its hat into the cannabis ring.

“These rumors are untrue,“ Coca-Cola said in an emailed statement to Bloomberg News. “As we have stated many times, we have no plans to enter the CBD market.”

In 2018, a BNN Bloomberg report indicated that the Georgia-based drink maker was in “serious talks” with the Canadian cannabis firm to create cannabis-infused beverages, which caused a boost for Aurora.

HEXO faces losses following share sale

Beleaguered cannabis company HEXO (NYSE:HEXO,TSX:HEXO) stumbled again this week after its US-listed shares dropped over 20 percent following the announcement of an agreement with institutional investors for the purchase and sale of almost 15 million of its common shares for US$25 million.

The Quebec-based cannabis company told investors on Thursday (December 26) that it plans to use the proceeds to fund its research and development operations, among other corporate purposes.

HEXO took a hit earlier this month with the release of its fiscal Q1 2020 results. It reported a net loss of C$62.4 million in the quarter, a 10.1 percent rise from the C$56.7 million reported in Q4 2019.

The company blamed a slow retail opening in key Canadian provinces for its disappointing results.

During an earnings call with investors and analysts, HEXO CEO Sebastien St-Louis said, “We don’t believe that the retail channel will be substantially built until the end of 2021 or part way through 2022. The illicit market channel will continue to thrive until retail access is brought to the majority of Canadians.”

Year-to-date, HEXO has fallen 57.9 percent in New York.

Market updates

On Tuesday (December 24), Origin House (CSE:OH,OTCQX:ORHOF) reminded shareholders of the Friday deadline for voting on its acquisition by Cresco Labs (CSE:CL,OTCQX:CRLBF).

According to Origin House, an overwhelming majority — over 99 percent — of shareholders have already voted in favor of the transaction.

The all-stock deal — once called the “largest-ever public company acquisition” in the US cannabis industry — is moving forward on reduced terms with a non-brokered financing on the part of Origin House of over 9.7 million of its own shares. The new deal, announced last month, is supposed to help reinforce the balance sheet of the combined company, Cresco said in a statement.

The Green Organic Dutchman (TSX:TGOD,OTCQX:TGODF) closed its previously announced senior secured credit facility of up to C$42.7 million with Maynbridge Capital.

This comes during a trying time for the firm, which has scrambled to acquire capital. It got its hands on C$103 million in funding in November, only to scrap that deal two weeks later in favor of an offering agreement with Canaccord Genuity to raise C$22 million in gross proceeds.

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Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.