In order to maintain its listing on the NYSE, Aurora Cannabis has to consolidate its outstanding common shares from 12 to 1.
Aurora Cannabis' (NYSE:ACB) share price dropped by 13% yesterday, following an announcement that the company would be selling off $350 million in stock.
The company announced that it intended to raise the equity by filing a new prospectus supplement for a renewed at the market program, which was necessary for Aurora to continue its listing on the New York Stock Exchange (NYSE).
For Aurora to maintain its listing, the company needs to keep an average value of $1.00 per share for a consecutive 30 trading-day period, otherwise, the company breaches compliance with one of the NYSE's continued listing standards. As of March onwards, Aurora has been consistently below $1.00.
Disclaimer: Past performance is not an indicator of future performance.
In order to bring its share price above $1.00, Aurora plans to do a 1-for-12 reverse stock split, which would reduce its outstanding share count from just above 1.3 billion to just below 109.5 million. This means that for every 12 stocks of ACB that investors hold, they would be consolidated into one amalgamated stock of the equivalent value.
The consolidation is slated to occur on May 11th, and has been approved by the company's Board of Directors. The reverse stock split would occur automatically for most shareholders.
More broadly speaking, the necessity for share consolidation is indicative of the precarious position that Aurora has found itself in, a far cry from where the company was just last year when it sat at $9 USD per share. Now, the company is at $0.76c per share and continuing to plummet.
Tumultuous leadership, consistently missed expectations and serious cash hemorrhaging have all sullied Aurora's once-great reputation, prompting many to rethink their position on this cannabis giant. Moreover, Aurora had over CAD $205 million in the bank as of March 31st, and the company still needed to raise a further $350 million – highlighting the immense cash burn of this cannabis company.
Is Aurora simply on a downward path to the bottom of the barrel? Or will the cannabis giant manage to find its feet?
To learn more about Aurora Cannabis, visit the company HQ here.
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