Hexo was forced to take a $2.4M writedown on its inventory of cannabis trim (lower-cannabinoid leaves and stems, collected for processing into extracts for edibles and vapes). Cannalyst Andrew “Mollytime” Udell said, “Producers were accumulating this byproduct for cannabis 2.0. There’s so much of it,” which is a problem considering producers may also be holding large stockpiles of high-value, high-cannabinoid buds.
Financial Post
- The company announced on Boxing Day (when markets were closed) it would offer up 15M new shares for $32.6M (USD$25M), a steep 14% below market value—thus devaluing existing stock. In response, uneasy investors drove the LP’s stock down to a 26-month low.
NewsWire, Investing.com, Globe and Mail
These are the latest signals Hexo is struggling. In late October, it laid off 20% of its workforce, while in early November, the company announced a loss three times greater than analysts predicted.
Bloomberg
- The Boxing Day offering is Hexo’s second recent questionable fundraising move. In October, company executives and board members bought $8.67M worth of a total of $70M raised through convertible debentures, a risky fundraising instrument that may leave companies with major debt.
Ottawa Citizen, MJ Biz Daily, Financial Post, Globe and Mail - Hexo also moved its head office from Gatineau, Quebec (across the river from Ottawa) into Ottawa proper so the company could secure Directors and Officers Liability Insurance, not available in Quebec.
- The company’s production facility in Masson-Angers, outside Gatineau, will not be affected by the move.
MJ Biz Daily
Along with Organigram and the Green Organic Dutchman, Hexo has announced plans to reduce production until the market can bear it.
Nasdaq
