Constellation Brands Not To Make Additional Cash Contributions To Canopy Growth

Constellation Brands (NYSE: STZ) does not intend to make additional cash infusions to that of Canopy Growth Corp (TSX: WEED) (NYSE: CGC) as per the latest regulatory filing by the alcohol giant. The company cited Canopy’s sizable cash and marketable securities position of $2.3 billion as justification for eliminating speculation on further cash infusions.

While Constellation did identify that it will not be making any further infusions into Canopy, they did leave a single caveat: currently outstanding warrants of Canopy Growth in which it holds. The firm did indicate that it will consider exercising these warrants, stating that they “will evaluate exercise of each of these warrants immediately prior to expiration,” however outside the exercise of currently held warrants the company will be making no further investments.

With respect to current warrants, Constellation owns approximately 18.9 million with an exercise price of C$12.98, as well as additional warrants via an amended agreement entered this past July with Canopy. The $12.98 warrants expire May 1, 2020, and could lead to approximately $245 million being sent over to Canopy should Constellation elect to exercise them. Based on the language from today’s filing, it appears that this will be a last minute exercise if Constellation chooses to proceed.

Currently outstanding “Tranche A” warrants expire November 1, 2023, leaving Constellation ample time to determine whether or not to proceed with further investment into the cannabis giant.

Whether Constellation elects to exercise its warrants will likely largely be dependent on the current share price of Canopy Growth near the time of expiry, and the potential future Constellation sees with such an investment. It’s likely a touchy subject in the board room currently however, as Constellation will be taking a US$148.5 million hit to its net income line for the twelve months ended February 29, 2020 as a result of the cannabis firms losses.

Constellation Brands last traded at $195.29 on the NYSE.


Information for this briefing was found via Sedar, Constellation Brands and Canopy Growth Corp. 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.

Video Articles

We’re At The Start of a Great Silver Boom | Ross McElroy & Andy Bowering – Apollo Silver Corp

Equinox Gold Q1 Earnings: When Everything Goes Wrong

SSR Mining Q1 Earnings: Costs Continue To Climb

Recommended

First Majestic Makes Second Major Discovery At Santa Elena In Just A Year

PTX Metals Hits 235.1 Metres Of Copper, Nickel Mineralization In Longest Intercept To Date At W2

Related News

Dead Cat Bounce? Poking At The Cannabis Market

An unexplained bout of optimism came over the marijuana markets this past week, as the...

Sunday, October 6, 2019, 07:00:13 AM

Constellation Brands Lets Canopy Growth Warrants Expire Unexercised

Constellation Brands (NYSE: STZ) appears to have walked away from the idea of investing further...

Sunday, November 5, 2023, 11:36:00 AM

Canopy Growth To Sell Canadian Retail Ops

Canopy Growth (TSX: WEED) announced on Tuesday that it has entered into agreements to divest...

Wednesday, September 28, 2022, 12:27:00 PM

Look for Constellation to Write Off Significant Amount of Canopy Investment

On October 30 2017, Constellation Brands (NYSE: STZ) and Canopy Growth Corp. (NASDAQ: CGC) jointly...

Thursday, August 25, 2022, 10:10:00 AM

Canopy Growth Posts Second Quarter Net Loss of $374.6 Million

Canopy Growth Corp (TSX: WEED)(NYSE: CGC) filed second quarter 2020 financials this morning, reporting net...

Thursday, November 14, 2019, 08:44:59 AM