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Aurora Cannabis Can “Strengthen” It’s Balance Sheet In The Future But Shareholders Will Once Again Get Massively Diluted

Oct 28, 2020 • 7:30 AM EDT
2 MIN READ  •  By Michael Berger
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During the last month, we have highlighted Aurora Cannabis Inc. (ACB.TO) (ACB) as a former leader in the Canadian cannabis market and emphasized the company’s need to raise additional capital.

Our prediction came true and today, Aurora Cannabis filed a base shelf prospectus to raise up to $500 million over the next 25 months. The prospectus did not provide much details on the offering as it relates to the type of security that may be sold and we expect to receive more clarity from the Canadian cannabis producer in the near future.

The Canadian cannabis producer also reported to have completed the previously filed At-The-Market (ATM) program. After the completion of the program, Aurora Cannabis reported to have more than $270 million of cash on hand and we are favorable on how this strengthened the balance sheet.

The announcement comes after a lawsuit was filed against the company, Michael Singer, and Glen Ibbott on behalf of investors that purchased shares between February 13th and September 4th. The complaint states that the company failed to disclose that it significantly overpaid for previous acquisitions among other items and we will monitor how this situation plays out.

The last few quarters have been challenging for Aurora Cannabis and we are cautiously optimistic with near and long-term potential of the business. During this time, the company has reported massive write downs of assets (more than $1 billion) and this is a trend that our readers should be aware of.

If these issues were not tough enough, Canaccord Genuity recently issued a $0 price target on Aurora Cannabis and this came as a surprise to us. The recent trend has been to the downside and momentum has been pointing lower. Going forward, we will continue to monitor Aurora Cannabis from the sidelines and will monitor how the new management team is able to use the capital to try and turn the business around.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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