Shares of Aurora Cannabis (ACB) - Get Report slumped on Monday after the embattled Canadian marijuana producer said it has approved plans for a 1-for-12 reverse stock split, after the company’s shares traded below $1 for more than 30 days.
The Canadian cannabis company on Monday announced the reverse stock split, which is scheduled for May 11, as a way to both regain compliance with rules of the New York Stock Exchange, which require action if a stock trades below a buck for 30 days, and also as a way to boost liquidity.
The move comes as Aurora and other marijuana producers and distributors grapple not only with oversupply but also falling demand for cannabis-infused products amid the coronavirus pandemic, which has also taken its toll on the pot industry.
The Canadian cannabis company had $205 million in cash at the end of March. To raise additional cash, the company said it was planning a renewed “at-the-market” or ATM program to raise additional equity capital on top the roughly $350 million that remains available under its outstanding shelf prospectus.
"The company intends to use a portion of this available capacity to provide further balance sheet strength and preserve flexibility given macroeconomic uncertainty caused by Covid-19," Aurora said in a statement.
For its fiscal third quarter, Aurora said it it expects to show "modest growth" in net revenue from the second quarter. The company also said its Canadian and international facilities are fully operational and it was working with local, national and international authorities to ensure it is complying with guidelines and best practices related to the coronavirus pandemic.
Shares of Aurora Cannabis were down 6.42% at 82 cents in premarket trading in New York on Monday.