Aphria Inc. announced Friday it has lined up a $100-million investment from an unidentified institutional investor, representing a fresh capital injection which the Canadian cannabis producer has earmarked for “opportunistic” international expansion efforts.
Aphria Chief Executive Officer Irwin Simon told BNN Bloomberg in a phone interview that the investment demonstrates confidence in Aphria as well as the company’s management and strategy.
“It shows [the investor] is a believer in the [cannabis] category where a lot of licensed producers have had trouble finding any type of financing,” Simon said.
“We didn’t have to do this. We have close to $600 million on our balance sheet. It just gives us a much stronger balance sheet to continue doing what we’re doing.”
Cannabis companies have faced a capital crunch in the past several months following a broad sell-off in the legal marijuana space and weaker-than-expected quarterly revenue figures. However, Aphria has emerged as one of the few Canadian cannabis producers to report positive adjusted earnings before interest, tax, depreciation and amortization, a key metric that other major companies have yet to achieve.
The yet-to-be-named investor will acquire about 14 million units at $7.12 apiece. Each unit includes one common share in Aphria as well as one-half of a common share purchase warrant priced at $9.26. The warrants are set to expire two years after the deal closes, Aphria said in a statement.
If the investor exercises all warrants, they will acquire about 21 million shares in the company, making it Aphria’s leading shareholder, according to Bloomberg data. John Cervini, an Aphria co-founder, is currently the company’s leading shareholder with about 9.8 million shares, or about 3.9 per cent of the company, according to Bloomberg data.
Simon declined to specify who the institutional investor is, citing a confidentiality agreement, but noted it would assume less than 10 per cent ownership of the company if the warrants are exercised in full.
“When someone writes a $100-million cheque, that’s going to be a sophisticated investor who knows Aphria and believes in Aphria,” he said. “It’s one investor with one cheque. With the warrants, it’s an opportunity to have an additional $64 million available to us.”
He also said Aphria is eyeing “opportunistic acquisitions” globally as well as within Canada to deploy its new capital, but declined to specify any areas where he is particularly interested in investing.
“There’s going to be opportunistic assets and a lot of stuff to do,” he said. “Over the next six months, the industry will condense and consolidate and I’d like to be prepared and have the right balance sheet to do that.”
Raymond James cannabis analysts Rahul Sarugaser and Michael Freeman said the $100-million investment signals that there still remains positive sentiment around cannabis players with strong balance sheets.
“The market clearly expects [Aphria] to not only weather the present storm, but to then flourish when the market recovers, likely during the back half of 2020,” the analysts said in an email to BNN Bloomberg.
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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
