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Highlights:
- Aurora Cannabis Inc. (Nasdaq:ACB) to raise the size of its previously bought deal to US$150 million.
- Shares of Aurora Cannabis dived substantially on Friday.
- Investors sensed desperation in the company, triggering shares to drop.
Aurora Cannabis Inc. (Nasdaq:ACB) on Friday announced to boost the size of its bought deal financing to US$150 million from US$125 million.
Its shares plunged more than 38% in intraday trading after the announcement. The ACB stock shed 63% of its value this year.
Aurora said that a syndicate of underwriters led by Canaccord Genuity and BMO Capital Markets would buy 61.2 million units of the company for US$2.45 per unit.
It will help raise around US$150 million. The Edmonton, Canada-headquartered firm said it would use the money for general corporate purposes.
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Why did Aurora Cannabis shares drop?
According to observers, investors did not take the deal lightly, and they sniffed some trouble brewing within the company. They felt the company is entering the agreement due to desperation.
Early this year, Aurora shares traded at nearly US$6 per share. Since the funds will be used for general corporate purposes, traders could not see any growth investments in mind.
Moreover, a media report last week said that Aurora was shutting down some of its operating facilities, including the flagship Aurora Sky facility in Edmonton, Alberta.
According to some analysts, Aurora could also sell its Sun greenhouse at an 80% reduced price from what it had invested.
Bottom line:
The Aurora deal is likely to close by June 1, 2022. However, it will be subject to customary conditions and approvals of the Toronto Stock Exchange and the Nasdaq Global Select Market.
