Please ensure Javascript is enabled for purposes of website accessibility

Aurora Cannabis Expands Credit Facility by 80%

By Eric Volkman – Aug 15, 2019 at 11:39PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The addition of new lenders will give the company access to around CA$360 million.

Aurora Cannabis (ACB -3.33%) has increased its financial leverage. The company announced on Thursday that it has managed to nearly double an existing credit facility.

The company says that the syndicate behind the facility has agreed to expand it to roughly 360 million Canadian dollars from the previous level of CA$200 million. The new arrangement takes the form of term loans and a revolving credit facility; these will mature in August 2021. Aurora did not specify other terms for the new funding.

Marijuana leaf atop a 100 dollar bill.

Image source: Getty Images.

Aurora Cannabis added that new top-tier Canadian banks have become part of the lending syndicate. Aurora did not get more specific other than saying that the widened syndicate is led by Bank of Montreal (BMO -0.44%).

Aurora did quote its CFO, Glen Ibbott, as saying:

The upsizing of our credit facility to approximately CA$360 million and the broadening of the lending syndicate to include additional Schedule 1 Canadian Banks is further recognition that our best-in-class production facilities lead the industry. Access to this non-dilutive capital is a core funding source the Company intends to utilize as it further executes on its strategic growth initiatives. In addition to cash being generated from operations, the Company also has access to other unsecured debt alternatives, a number of equity investments, and has access to a C$514 million... At-The-Market equity program.

Capital is particularly valuable for marijuana companies at the moment because many are eager to build scale through means such as organic expansion, partnerships, and acquisitions.

Aurora says it has funded production capacity of over 625,000 kilos per year. It has been particularly active in buying complementary assets -- recent purchases include an expensive ($2.5 billion) deal to acquire producer MedReleaf, and the more modest $852 million buy of medical cannabis specialist CanniMed. All told, the company currently holds 16 wholly owned subsidiaries in its corporate structure.

Most of the larger companies in the cannabis sector also have ambitions to move product on foreign markets where marijuana laws are at least relatively permissive. Aurora plans to grow its international footprint, which for the moment consists of operations and sales across 25 countries.

Investors weren't excited about news of the new funding. Aurora stock closed down by nearly 7% on Thursday.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Aurora Cannabis Stock Quote
Aurora Cannabis
$1.16 (-3.33%) $0.04
Bank of Montreal Stock Quote
Bank of Montreal
$89.00 (-0.44%) $0.39

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.