“These decisions are never easy to make, but we are committed to ensuring the Company is appropriately sized relative to market conditions – we are incredibly grateful for the commitment that our affected employees have made in helping build the Company that Organigram is today” said Organigram CEO Greg Engel.
Here’s the press release in full
MONCTON, New Brunswick–(BUSINESS WIRE)–Organigram Holdings Inc. (“Organigram” or the “Company”) (TSX: OGI) (NASDAQ: OGI) provides a corporate update on recent developments of the Company in relation to the worldwide COVID-19 pandemic and the continuing evolution of the Canadian cannabis industry.
In an effort to better align its production capacity to prevailing market conditions, Organigram has reduced its workforce by approximately 25%. The decision will affect approximately 220 employees including a small number who are not on temporary layoff. The Company will move forward with a skilled, leaner, cross-functional workforce of approximately 433 active employees operating out of its indoor production facility in Moncton, New Brunswick. Company-wide, Organigram has a total workforce of 609 employees this includes 84 employees remaining on temporary layoff who may be recalled if and when needed as the business requires.
“These decisions are never easy to make, but we are committed to ensuring the Company is appropriately sized relative to market conditions – we are incredibly grateful for the commitment that our affected employees have made in helping build the Company that Organigram is today” said Organigram CEO Greg Engel. Throughout the COVID-19 pandemic, Organigram has remained focused on proactive strategies to protect the health and safety of its workers both inside and outside of its production facility as a priority, while also focusing on maintaining the continuity of its business. With a reduced workforce, the Company believes it can continue to meet current and anticipated near term demand levels.
For the foreseeable future the Company will continue to cultivate less than the target production capacity of cannabis its Moncton campus was originally designed for, with a focus on bringing new cultivars to market and increasing the tetrahydrocannabinol (“THC”) and terpene profile of its dried flower to meet emerging consumer demand.
Q3 2020 and Reliance on Blanket Exemptive Relief
The Company announced that it is briefly postponing the timing for filing of its interim financial statements, interim management’s discussion and analysis and related certifications (the “Q3 Interim Filings”) for the interim period ended May 31, 2020 by approximately one week.
Organigram is relying on blanket exemptive relief granted by the Canadian securities regulatory authorities that permits it to delay the filing of its Q3 Interim Filings otherwise required to be filed by July 15, 2020 in accordance with the timelines prescribed by National Instrument 51-102 – Continuous Disclosure Obligations.
The Company expects that its Q3 Interim Filings will be filed on July 21, 2020. Until such time as the Q3 Interim Filings are filed, Organigram management and other insiders are subject to a trading blackout in accordance with the terms of the blanket relief.
Given the timing of the Company’s fiscal Q3 2020 corresponding with COVID-19 coupled with changing market dynamics, the Company expects to report a decline in net revenue for fiscal Q3 2020 compared to fiscal Q2 2020 impacted by insignificant wholesale revenue being recorded in the quarter. The Company also expects to report a decrease in selling, general & administrative (SG&A) expenses for fiscal Q3 2020 compared to fiscal Q2 2020. As the Company right-sizes its production to market demand and reviews its asset carrying values, it expects to report negative adjustments to inventories and an asset impairment on its Moncton facility. Based on new production levels and its inventories on hand, the Company currently expects it will be able to meet consumer demand as it continues to adjust its operations to emerging preferences in a dynamic marketplace.
Other than as disclosed in this news release and its May 29, 2020 news release, which announced the amendment to the Company’s credit agreement dated May 31, 2019, with the Bank of Montreal as lead arranger and agent as well as a syndicate including three other lenders, there have been no material business developments since the date of the Company’s last interim financial statements filed on April 14, 2020. Notwithstanding the foregoing, the Company has issued news releases subsequent to that date copies of which are available on SEDAR at www.sedar.com and EDGAR at www.sec.gov.