Aurora reported stockholders of 94% (worth roughly $230M) of its convertible debentures—bonds paying 5% interest that may be converted to stocks at a fixed rate—agreed to a company plan to offer 6% discounts on prematurely converting their debentures to stocks. The deal will help lower Aurora’s debt–albeit at the risk of diluting the company’s stock.
Newswire, The Deep Dive, Market Realist
- The debentures were scheduled to become due in March.
- The move prompted investor despair, driving Aurora stock down to a five-year low.
MarketWatch
Analysts have been sounding the alarm about the predominance of risky convertible debt for some time. Unless the market rises and companies flourish, convertible debentures can shackle firms to punishing interest.
Globe and Mail
- Still, cannabis companies opted for convertible debentures in the absence of access to traditional financing. According to Bloomberg, that choice has “left billions in convertible debentures underwater.”
Bloomberg
Cannabis companies do not have a lot of financing options, so many have concluded risky financing is better than none.
Globe and Mail
Quick Hits
- Police in Saint John, New Brunswick, are following Ontario’s lead by prosecuting landlords who own properties in which unlicensed REC stores are located.
CBC New Brunswick
