(Smiths Falls) Canopy Growth shares fell 40% on Friday after the cannabis producer announced it had signed debt-reduction agreements with its secured and unsecured lenders — a plan but it said it would issue 90.4 million shares and new convertible bonds will result in debt.
Canopy shares plunged 34 cents on the Toronto Stock Exchange to close at 51 cents.
According to the Smith Falls, Ontario-based company, the agreements announced for signing should also help reduce annual interest costs by approximately $20 million to $30 million.
Judy Hong, Canopy’s chief financial officer, said the deals would allow the company to save cash and further improve its balance sheet through a value-added and meaningful reduction in overall debt.
The company said it will repay approximately $193 million of existing notes with a mix of cash, stock and new interest-bearing convertible unsecured notes.
Canopy will further reduce its debt by $100 million under a new facility arrangement for a cash payment of $93 million and expects a further capital reduction to 95 cents per dollar upon completion of the sale of certain assets.
The company sold some of its facilities as part of an organizational transformation announced last year to reduce costs.
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