Canopy Growth to Close Plants, Cut Staff and Take a Charge

Canopy Growth said it would take a charge of C$700 million to C$800 million to close facilities and dismiss 85 staffers.
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Canopy Growth  (CGC) - Get Report shares on Thursday fell after the cannabis company said it expected to take a C$700 million to C$800 million (US$495 million-US$566 million) charge to close plants and dismiss 85 staffers.

The restructuring will shut down operations in Springfield, N.Y., and its indoor facility in Yorkton, Saskatchewan. 

The Smith Falls, Ontario, company also said it’s shuttering its operations in South Africa and Lesotho and at its cultivation facility in Colombia.

"When I arrived at Canopy Growth in January, I committed to conducting a strategic review in order to lower our cost structure and reduce our cash burn," Chief Executive David Klein said in a statement.

"[The] changes outlined today are an important step in our continuing efforts to focus the company's priorities and will result in a healthier, stronger organization that will continue to be an innovator and leader in this industry."

Meanwhile, Jefferies analyst Owen Bennett upgraded Canopy Growth to hold from underperform, The Fly reports. 

Bennett wrote in a report that the stock’s recent drop - 42% over the past three months - already accounts for the impact of the coronavirus pandemic. He said Canopy Growth's management could succeed on its game plan.

Bennett cut his price target to $15.60 from $17.30, reflecting the stock’s recent decline. Canopy Growth shares recently traded at $14.28, down 3.3%.

Bennett also downgraded cannabis company Tilray  (TLRY) - Get Report to underperform from hold, according to The Fly. 

After a recent short squeeze, the company’s stock price is too high, given its near-term business outlook, he said.

 Tilray shares at last check were trading at $6.24, down 8.1%.