Aurora Cannabis to initiate reverse stock split

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The cannabis company has not been able to stabilize itself after suffering several setbacks in 2019

Facing significant losses during the last few days after announcing its cash position, Aurora Cannabis has decided to change its strategy to raise capital and have more liquidity. On April 13, on the NYSE stock exchange, the cannabis venture dropped 13.2%, and, on the Toronto Stock Exchange, the decline was 13.1%. In order to achieve its newly announced goals, including an improved strategy while facing the COVID-19 pandemic, Aurora has decided to go through a reverse stock split in response to the financial crisis.

It is not a secret that it has been more than a difficult time for all the cannabis industry, and Aurora has been at risk of being delisted for quite some time. Stock exchanges like NYSE have a minimum benchmark set at $1 for a stock price on the exchange, which Aurora stock has fallen under a few times recently. Based on the exchange rules, a company is given a one-month grace period to adjust its share price before receiving a warning letter from the exchange.

That is the reason why, this past Monday, the board of directors at Aurora Cannabis approved a reverse stock split of 1:12 so the price per share can be boosted to $1. Also, part of its strategy is to bring back the ATM (at-the-market) offering, a program that can help to raise additional equity capital for up to $350 million. This program allows Aurora to issue its own common shares at stock markets but without issuing any discounts, warrants or other complex security requirements. Since Aurora started this program on March 31, it has raised $145 million.