Business of Cannabis write..
Canadian cannabis giant Canopy Growth announced of Friday that it has reached an agreement with its lenders to significantly reduce its debt.
As part of the agreements made with numerous companies Canopy says it should reduce its considerable debt pile, which stood at over C$1bn as of March 31 this year, by C$437m ‘over the next two quarters’.
What’s more, the deals will help reduce its annual interest costs by between C$20m and C$30m.
Despite the debt reduction, Canopy is far from out of the woods, as New Cannabis Ventures points out a prominent analyst changed its target on Canopy Growth from C$1.75 to C$0 earlier this month, bringing its stock price to an all time low on Friday.
As such, the publication suggested that the company is unlikely to be able to get out of the situation it currently finds itself in, adding that its future will largely depend on its key investor Constellation Brands.
Constellation Brands, the owner of Corona beer which invested $4bn in Canopy in 2018, is itself ‘very underwater with its investment’.
While it suggests Constellation ‘could buy’ the embattled company, investment is currently being hampered by Canopy’s struggle to keep itself listed on NASDAQ, after receiving a share price warning from the exchange earlier this month.
Canopy is also currently attempting to close the purchase of three US cannabis companies, in an effort to break into the potentially US$50bn market.
However, with reports suggesting that it may have less than 12 months of cash runway left, alongside reports of massive cuts to its workforce, the completion of these deals is not a foregone conclusion.
Sean Hocking
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