HEXO to Raise Up to 1.2 Billion Canadian Dollars in Fresh Capital

Hardly for the first time in its corporate life, HEXO (NASDAQ:HEXO) is gearing up to raise some funds. The company announced on Thursday that it has filed regulatory paperwork stating that it aims to amass up to 1.2 billion Canadian dollars ($958 million) over the next 25 months. This can, and likely will, take different forms, including the issuance of stock, warrants, or the combination of the two known as “units” — an increasingly common instrument of fund-raising issued by marijuana companies of late.

In its press release trumpeting the declaration, HEXO quoted its CEO Sebastien St-Louis as saying that the monies raised will “provide maximum flexibility as we continue to pursue strategic initiatives in both the United States and Canada.”

“We have now started to deploy capital in the United States, are remaining active in [mergers and acquisitions] and are in ongoing discussions with potential non-beverage [consumer packaged goods] partners which we expect will require additional capital as we continue to execute on our growth and expansion strategy,” he added without providing further detail.

Marijuana flower on Canadian currency.

Image source: Getty Images.

HEXO has recently put its money where its mouth is, in terms of acquisitions and partnerships. In February, the company announced it struck a deal to buy Zenabis Global, a Canadian peer, for the equivalent of $186 million. The company is also teaming up with Molson Coors Brewing to co-develop cannabis-laced drinks, which could be a big hit in the U.S. in particular if federal marijuana laws are ever relaxed.

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Investors, however, are likely concerned that the upcoming capital raises will dilute their share holdings. On Friday, HEXO stock fell by 3.2%, in contrast to the nearly 0.4% gain of the S&P 500 index.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/04/16/hexo-to-raise-up-to-ca12-billion-in-fresh-capital/

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