Shares of Canadian cannabis grower Aurora Cannabis (ACB -2.45%) dropped today after the company announced a new share offering. The stock was down 7.4% as of 10:45 a.m. EST.
The company is taking the opportunity to raise money after its shares more than doubled over the past three months.
Aurora announced that it will be issuing 12 million new shares, plus additional warrants to purchase shares. The agreement with underwriters is a "bought deal" arrangement, meaning the underwriter agrees to purchase all of the offered units, but terms result in a lower share price. The company agreed to a price of $10.45 per share, or about 13% below recent highs from a week ago.
Aurora will use the $125 million in proceeds "for general corporate purposes, which may include opportunistically reducing debt."
The marijuana company has been working on a business transformation over the past year. The plan has included reducing production with facility closures and capacity restrictions to better align with the market. It also has resulted in job reductions, including last week, after the company announced a new sales distribution agreement.
The moves are meant to advance Aurora closer to profitability. Today's offering "fits with its broader strategy to have a strong balance sheet while maintaining maximum flexibility to invest and build," the company said in a statement.
Added dilution to existing investors makes the path toward long-term investment gains more difficult, and the funding will need to reap benefits to make it a positive move for shareholders.