BayStreet – Canopy Growth Stock Falls 18% On Debt Deal

Shares of Canopy Growth (WEED) fell 18% after the Canadian cannabis producer announced plans to exchange debt for a combination of stock and cash.

The Smiths Falls, Ontario-based company’s stock dropped to a five-year low after announcing that it has agreed to swap $255.4 million of debt for shares and $3 million in cash for accrued and unpaid interest.

The deal will see Constellation Brands (STZ), one of the largest shareholders in Canopy Growth, acquire an additional 21.9 million to 30.7 million of stock in the cannabis company at a cost of $2.50 U.S. to $3.50 U.S. per share.

Constellation Brands, which is based in the U.S. and specializes in alcohol production and sales, currently has a 36% stake in Canopy Growth. After the deal is concluded, Constellation Brands’ stake will grow to more than 40%.

The deal to exchange debt for stock and cash comes as analysts have lowered their price targets on Canopy Growth’s stock and investors flee the cannabis sector.

Canopy Growth’s stock has fallen 67% this year to $3.66 per share, making it one of the worst performers in the Alternative Harvest exchange-traded fund (ETF), known by the ticker symbol “MJ,” that tracks cannabis stocks and is down 48% year to date.

https://www.baystreet.ca/articles/stockstowatch/78745/Canopy-Growth-Stocks-Falls-18-On-Debt-Deal

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