Aurora Cannabis Inc. (NYSE: ACB) stock tanked in Wednesday’s session on news that the company will raise capital with a secondary offering. The Canadian cannabis producer is looking to raise about $150 million by offering 20 million units at $7.50 apiece.
Each unit will be comprised of one common share of Aurora Cannabis and one-half of one common share purchase warrant. Each warrant will be exercisable to acquire one common share of the company for a period of 40 months following the closing date of the offering at an exercise price of $9.00 per warrant share
The underwriters for this offering are ATB Capital Markets and BMO Capital Markets. They have a 30-day option to purchase up to an additional 15% of the units being offered.
The company intends to use the net proceeds from this offering to fund growth opportunities and for working capital and other general corporate purposes.
Excluding Wednesday’s move, Aurora Cannabis stock had underperformed the broad markets with a pullback of about 68% year to date. In the past 52 weeks, the share price was closer to 81% lower. However, in the past month shares are actually up about 67%, so it makes sense to capitalize on a secondary offering now.
Aurora Cannabis stock traded down about 19% to $6.69 on Wednesday, in a 52-week range of $3.71 to $42.96.