Aurora Cannabis Lays Off 200 Employees, Reduces Sky And Sun Facilities To 25% Of Prior Capacity

Whereas Aphria (TSX: APHA) (NASDAQ: APHA) this morning announced a blockbuster deal, Aurora Cannabis (TSX: ACB) (NYSE: ACB) this morning announced further operational cutbacks. The reductions, which were widely reported on Twitter last night, will see Aurora Sun and Aurora Sky, both cultivation facilities, see production cut back by 75%, resulting in the layoffs of more than 200 employees just days before the holidays.

The reductions are being conducted as a means of reducing cash flow and “better address consumer needs.” Despite its significant cultivation assets, the company has also indicated that it has “expanded its network of external supply” by implementing spot purchasing of third party supply.

The translation of this appears to mean that the company recognized it was not a quality grower nor the lowest cost grower, and is instead searching for a quality supply of product elsewhere. The term used here by the company is “reduced cultivation risks.”

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Also announced this morning is that the compand has entered an agreement related to amending a credit agreement and remove covenants related to a minimum EBITDA requirement to a minimum liquidity requirement, while extending maturity. This modification is interesting, given prior guidance for EBITDA positive figures in the second quarter of 2021.

The company is said to have reached an agreement related to a second facility for certain amendments as well, with the same terminology adjusted and a maturity extension to December 31, 2022. Commitments under the facility are not expected to change however.

Aurora is said to have a cash position of roughly $450.0 million as of December 15, 2020.

Aurora Cannabis last traded at $12.92 on the TSX.

Information for this briefing was found via Sedar and Aurora Cannabis. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.