Implications: Canopy Conversion Repriced -92%

by | Jun 30, 2022 | Company Analysis, Extract

Canopy Growth (CGC) is issuing between 56.7-78.4 million shares to retire C$255.4 million of its C$600 million convertible note due 2023. The conversion price for this redemption works out to somewhere between US$2.50-3.50, and will be based on the 10 day average price starting June 30 (at the current intraday price of US$2.92, this yields about 68 million shares).

This is 92% below the conversion price on this note of C$48.17 or US$37.57, but with the stock at US$3.50 on June 29 and conversion needing a 11X increase in the equity to convert, this convertible debt has been clearly debt and not equity for a long time.

This will save Canopy about US$8.5 million of cash interest over the next year and reduces the debt outstanding and due on July 15, 2023 by about US$199 million – but what are the bigger implications? Premium & Extract Members can read below…