Will Hexo’s Direct Offering Help Push the Stock Higher?
Hexo shares slid on Friday after the Canadian cannabis firm announced that it is conducting a direct offering of $20 million worth of shares.
Hexo Corp. (NYSE: HEXO) shares slid on Friday after the Canadian cannabis firm announced that it is conducting a direct offering of $20 million worth of shares. The effort is intended to raise funding for further research and development.
According to the offering, Hexo has entered into a definitive agreement with institutional investors for the purchase and sale of roughly 11.98 million common shares at an offering price of $1.67 per share, for gross proceeds of $20 million.
Hexo also agreed to issue to the investors common share purchase warrants to purchase 5,988,024 common shares of the company. The warrants will have a five-year term and an exercise price of $2.45 per share.
The net proceeds from the offering will be put toward working capital and other general corporate purposes, including funding the company’s research and development to further advance the Hexo’s innovation strategies.
The offering is expected to close on or about January 22, 2020, subject to the satisfaction of customary closing conditions. A.G.P./Alliance Global Partners is acting as sole placement agent for the offering.
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After the price of $1.67 per share, this offering puts Hexo’s market cap right at $420 million.
Excluding Friday’s move, Hexo stock had underperformed the broad markets with a 62% pullback over the past 52 weeks. In just the past quarter alone, the shares were down closer to 28%.
Shares of Hexo traded down 8% to $1.64 on Friday, in a 52-week range of $1.25 to $8.40.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
