Auxly stock is moving up marginally after Auxly Cannabis Group (TSXV:XLY) (OTCQX:CBWTF) announced outdoor cultivation expansion through the launch of Robinsons Outdoor Grow.
New Development
On Friday, Auxly Cannabis Group made another significant announcement that should come as a positive for investors. Auxly announced that its fully-owned subsidiary Robinsons Cannabis Inc is all set to have a state-of-the-art cultivation facility named Robinsons Outdoor Grow. It is a high-quality outdoor cultivation project located right in the middle of Annapolis Valley, the famed wine area of Nova Scotia.
The area is well known for its diverse soil, and experts believe that it is ideal for cannabis cultivation. The outdoor project spans over an area of as much as 158 acres and also has easy access to the nearby highways. Robinsons is going to use proprietary genetics and other techniques in order to drive productivity at the location.
Reducing Debts
The past few months have been tough for most cannabis companies due to larger issues with the whole industry. However, that doesn’t mean that the best-known companies have stopped working towards making their businesses more efficient.
Recently, it has emerged that cannabis firm Auxly Cannabis Group has managed to reduce its convertible debt by as much as $95 million. It is a significant development and has almost managed to wipe away the debt that the company had on its books. The company issued the convertible debentures back in January 2018, and it was going to be due in January next year.
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Auxly stock is up 1.50% at $0.69 CAD.
However, Auxly has managed to strengthen its position drastically by prepaying the debt. The debt dragged Auxly stock down. Now, the company will have debt of only $4.57 million on its books, and it can be said that the company is practically debt-free. Additionally, the early payment has also helped Auxly in saving as much as $1.25 million in interest payments. Now that the debt burden is virtually gone, the company can now hope to expand its business aggressively.
The reason behind the company’s previous debt issues is due to the fact that its business model is highly capital intensive. Auxly Cannabis Group is primarily involved in cannabis streaming deals, and the company needs to make upfront payments to many of the growers.
Auxly announced back in October that it was going to pay off its debt early and also stated that the share conversion would be done at the rate of $0.74 for each share. Previously, it was agreed that the conversion would take place at $1.55 per share.
The amendment would also result in a higher degree of liquidation of Auxly stock, and it remains to be seen how this affects the stock price. The company is currently flush with cash, having raised $123 million in convertible debentures from tobacco company Imperial Brands (OTCQX:IMBBF).
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