By / December 8, 2019

Aurora Cannabis stocks are on the right track

Before the quarterly report in September, analysts questioned Aurora Cannabis’s stocks. The main problem was a large convertible debt due in March that would weigh on the shares.

The recent decision to convert almost all bondholders into common stock has been a painful dilution for existing shareholders, but it is necessary for Aurora Cannabis to be able to attract new investors.

The company still has a lot of work to do in order to improve their balance sheets before stocks for Aurora Cannabis will be rated as “buy.” This convertible debt conversion was a key step.

You can find other interesting cannabis news and other important marijuana investing information from the emerging cannabis sector in the app.

Aurora Cannabis converts their convertible debt

Aurora Cannabis announced that 99% of the $173 million (CA$230 million) principal amount of unsecured convertible debentures due Mar. 9, 2020, have voluntarily elected to convert into common shares.

As a result, the Canadian cannabis company will issue a total of 69,135,117 common shares at a conversion price of $2.47 (CA$3.28).

The company already had more than 1.1 billion diluted shares. For investors, dilution is even more painful given that the stock already exceeded $10 earlier this year.

At a share price of $2.50, the fully diluted market capitalization is approximately $2.6 billion.

Where does that leave the stocks for Aurora cannabis?

a clamp and a calculator, sitting on a document representing stocks for Aurora Cannabis
Aurora Cannabis’s convertible debt will weigh on its shareholders. (Source)

The big question is where stocks for Aurora Cannabis is going with the stock reduced to $2.50 and the crucial convertible debt managed.

Operating losses, combined with capital expenditure requirements, remain significant, despite the cessation of spending on their two main facilities.

Aurora Cannabis closed the last quarter ending on Sept. 30, with $115 million (CA$153 million) in cash on their balance sheet.

When combined with previously completed market equity offerings, Aurora has raised sufficient cash to fund these major capital expenditure projects for the year.

The problem remains, as ongoing operating losses must be fully funded. The company has many options, including the sale of assets with facilities and assets of $732 million (CA$973 million).

Also, additional investments of $86 million (CA$115 million) or new equity investments through ATMs, among others.

Other options for Aurora Cannabis stocks

Of course, the other option is to reduce EBITDA losses adjusted for the significant loss of FQ1 by $25.6 million (CA$34 million) to reduce financing requirements.

This probability of reducing losses seems low in the short term, as Aurora Cannabis invests in the deployment of “Cannabis 2.0” in Canada and the CBD market in the United States.

Potential investors will likely wait until the additional financing is resolved and the Canadian market further rationalizes supply while demand is driven by Cannabis 2.0.


(Featured image by Marten Bjork via Unsplash)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in JAMBON BURST, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.

Comments are closed for this post.