HEXO Stock Jumps After Closing $70 Million Financing Round

HEXO Stock

HEXO stock is moving higher after HEXO Corp (TSX:HEXO) (NYSE:HEXO) closed its long-running financing round that was initially announced on October 23, 2019.

Major Relief

The situation in the cannabis industry has been pretty dire for the better part of 2019, and most companies in the sector have taken to other methods of raising capital amidst falling stock prices. In a new development, HEXO Corp announced that it has managed to close its financing round that was announced way back on October 23.

The $70 million financing round was supposed to be in unsecured convertible debentures. It was supposed to close on November 15, but the company ended up closing it just today under terms that are quite different from what was originally announced.

The company had initially announced that 8% of the $70 million was going through unsecured convertible debentures. The debentures could be converted to $3.16 for a share. It has been revealed that investors have been able to subscribe to around $8.676 million. However, with regard to conversion, the company has made an amendment.

While investors would be allowed to convert their debentures for $3.16 a share, they can either get their debt settled or get the price of a share, which is equivalent to the five-day volume-weighted average.

HEXO stock is up 2.50% at $2.11 USD amidst all this.

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Over the course of the last seven months, HEXO stock has lost as much as 70%, and it is a logical thing to wonder whether it is worthwhile investing in the stock or not. Firstly, the company has signed a massive supply agreement with its home province Quebec, which will see HEXO supply as much as 200,000 kilos of cannabis over the next five years.

The acquisition of Newstrike Brands bolsters the company's production as well. However, its most important deal is the cannabis beverage joint venture with Molson Coors Brewing (NYSE:TAP).

Moreover, HEXO stock now trades at three times its projected 2021 sales, and that is an attractive multiple by industry standards. That being said, boosting production might not help much while the industry is suffering from oversupply. Moreover, the legalization of cannabis derivatives might suffer from the same problems as the cannabis industry at large.

The company only has $139 million in cash at the moment, and that is not an entirely healthy position.

So, what do you think about this cannabis company's position in the market?

>> Read More HEXO News

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