Canopy Growth's Consolidation Strategy Following NASDAQ Notice That Shares Are Too Low For Too Long

Smith Falls-based Canopy Growth Corp. WEED CGC has received a non-compliance notice from the NASDAQ due to its shares' closing bid price remaining below $1 per share for 30 consecutive business days.

However, the company has been granted a 180-day period to regain compliance. During this period, Canopy Growth's shares will continue to be traded on the exchange, and its listing on the Toronto Stock Exchange remains unaffected, reported MJBiz Daily.

See Also: HEXO Regains Compliance With Nasdaq Minimum Bid Price Requirement

Canopy’s Strategy

To address the non-compliance issue, Canopy Growth has outlined a strategic approach.

• The company intends to seek approval from shareholders for a share consolidation plan during its upcoming annual meeting on September 25.

• The proposal suggests a consolidation ratio ranging from one post-consolidation common share for every five to 15 pre-consolidation common shares. If approved, the company's board will have until September 25 to execute the consolidation.

Moreover, Canopy Growth may consider implementing a reverse stock split to regain compliance.

In addition to its compliance efforts, Canopy Growth recently entered into various agreements, including privately negotiated redemption agreements with certain holders of its unsecured senior notes due July 15, 2023. These agreements are expected to reduce the company's total debt by approximately $437 million over the next six months and decrease annual interest costs by approximately $20 to $30 million.

According to New Cannabis Ventures, the situation for Canopy Growth has been challenging, with the company experiencing fluctuations since the departure of former CEO Bruce Linton in 2019.

See Also: Former Canopy Growth CEO Bruce Linton On The Current Struggles the Company Is Facing

Price Action: On Monday, at the market close, CGC shares were trading 2.66% lower at $0.3739 per share.

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Read Next: Canopy Growth's Strategy To Deleverage Balance Sheet By $437M And Enhance Financial Flexibility

Photo: Courtesy Of Hans Eiskonen On Unsplash