Aurora Cannabis (TSX: ACB) (NYSE: ACB) has taken a loss on yet another investment, with the announcement early today that it has sold its interest in Australia-based Cann Group Limited (ASX: CAN). The Australian cannabis cultivator made the announcement this morning that it has lost the key investor.
Aurora originally bought into Cann Group with a AUD$6.5 million investment in the firms IPO round at A$0.30 per share back in March 2017. At the time, it amounted to a 19.9% stake in the group, whom at the time was one of the leading Australian cannabis operators. The purchase was good for 21,562,314 shares at the time of the IPO.
That figure was then bumped up significantly later that year, with Aurora investing a further A$26 million into the company, at a price of A$2.50 per share. Following the heavy appreciation in the share price, the significant bump in dollar value was enough to bump their interest in the company to just 22.9%, with an estimated 10.4 million additional shares being purchased. That original investment of A$6.5 million however had risen in value to A$65 million.
Fast forward two years, and the value of that investment has fallen significantly from its heights, with the total value as of Aurora’s June 30, 2020 financial filings pegged at C$23.4 million. Notably, it was indicated that Aurora still maintained a 22.4% interest in the company.
This ownership percentage is somewhat at odds with the text released by the Cann Group this morning, wherein it states that “Aurora Cannabis Inc has exited its ownership interest in Cann Group.” It then indicates that Aurora sold its 11.84% stake in the company via off-market trades. However, based on Bloomberg Data, it appears that Aurora’s ownership stake percentage indicated in its filings is wrong, with Cann Group stated to have 269.9 million shares outstanding. The share figure stated by Aurora simply does not jive with the percentage ownership they provided based on this figure.
As a result, it is assumed that Aurora has completely exited its position in Cann Group. Based on the closing share price of A$0.42 on Friday, its estimated that Aurora sold the shares for approximately A$13.4 million, representing a significant loss on its total investment of A$32.5 million into the firm. In Canadian dollar terms, this amounts to $12.7 million in proceeds from the asset sale.
Cumulatively, Aurora took a 58.7% loss on its investment based on our estimates.
Aurora Cannabis last traded at $4.95 on the NYSE.
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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.