Aurora's Plan For $125M Public Offering Further Tanks Stock

Aurora Cannabis Inc ACB shares plunged in the after-hours session Tuesday as the company announced plans for a $125 million public offering.

What Happened: Aurora plans to price each unit of the fresh issue at $7.50, which will consist of one common share of the company and one-half portion of a share purchase warrant. A whole warrant will entitle the holder to buy one common stock at an exercise price of $9 per warrant share. These warrants would have a maturity period of 40 months from the date of offer close.

The company is yet to receive the approvals from the New York Stock Exchange and Toronto Stock Exchange and would finalize the terms of the offering at the time of pricing.

Aurora has engaged BMO Capital Markets BMO and ATB Capital Markets as the book runners and the underwriters are expected to be granted 15% over-allotment options exercisable within 30 days from the day of the offering's closure.

Why Does It Matter: Aurora stock was on a rebound as of Monday, gaining 87% since last Wednesday, or about 67% in the previous 30-day period.

Jeffries analyst Owen Bennett believes that the recent upticks in Aurora’s stock should not be read as “overly encouraging,” MarketWatch reported. Jefferies issued a hold recommendation for Aurora with a price target of CAD 6.90.

Bennett drew his inference based on Aurora’s mixed sales numbers and its shifting focus to the Cannabis 2.0 products. Aurora reported net revenue of CAD 67.8 million ($52.3 million) in the quarter ended Sept. 30.

The EBITDA loss for 2021 Q1 was at CAD 57.9 million, with a cash balance of CAD 250 million as of Nov. 6. The Daily Special segment, a key contributor to the overall revenue, declined by $3.9 million.

Price Action: After a 26.16% downward spiral during regular trading hours, ACB tanked another 16.39% during Tuesday’s after-hours session at $6.94 per share.

Photo courtesy: Lea-Kim via Wikimedia