Cresco stock is taking a hit this morning after Cresco Labs Inc (CSE:CL) (OTCQX:CRLBF) announced an equity distribution agreement with Canaccord Genuity Corp.
The past few months have not been particularly great for the cannabis sector, and many of the leading companies in the industry have seen their stock prices plunge considerably. In such a situation, companies need to be creative with their capital raising techniques. In a new development, American multistate cannabis operator Cresco Labs announced that it has managed to agree on an equity distribution agreement with Canaccord Genuity Corp. By way of this agreement, the company will be able to sell a maximum of $55 million CAD worth of subordinate voting shares.
Cresco is apparently going to use the capital raised through this move, known as an ATM Program, for general expenses, debt repayment, potential acquisitions, and discretionary capital spending. The number of shares that are going to be sold and the timing for the same are both going to be ultimately decided by Cresco.
At the time of writing, Cresco stock is down 5.80% at $6.66 CAD.
It has been an eventful few weeks for Cresco Labs. Back on November 26, the company announced its financial results for the third quarter, which proved disappointing. The company generated revenue of $36.2 million for the period, which fell short of Wall Street’s estimates of $37.9 million. In the prior-year period, the company had generated revenue of $12.7 million.
In the same quarter, Cresco reported a net loss of $8.6 million, which was substantially higher than the $1.2 million loss it suffered in the year-ago period.
On the same day that the company announced its financial results, it also announced that it had decided to terminate its deal to acquire VidaCann Ltd.
The deal had been agreed back in March this year, but Cresco Labs stated that it had decided to cancel the deal in order to save cash. The company’s primary concern was improving its current bottom-line and top-line growth. Additionally, the company also reached a sale and leaseback deal for $38 million for two of its properties in Michigan and Ohio.
Cresco stock has fallen over 26% so far this year.
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