Revised terms of credit facilities support the execution of a business transformation plan that is focused on long-term, sustainable sales growth and improving operating cash flow
- The terms of the credit facility were improved, including the extension of the term on December 2022
- ~ $ 450 million of cash on balance and improving the company’s cash flow positions to drive sustainable, long-term sales growth
- Production volume is now aligned with sales by introducing a more agile, variable cost model
- Expects Adjusted EBITDA loss in the second quarter of fiscal 2021 to improve compared to the first quarter, although Covid-19 restrictions resurfaced in key markets
NYSE | TSX: ACB
EDMONTON, AB, December 16, 2020 / PRNewswire / – Aurora Cannabis Inc. (the “Company” or “Aurora”) (NYSE: ACB) (TSX: ACB), the Canadian company that defines the future of cannabinoids worldwide, today released a business update.
“Our substantial liquidity position has enabled us to change the terms of credit facilities by extending the term and moving from a minimum EBITDA covenant to a minimum liquidity covenant, giving us the financial flexibility we need to execute our business conversion plan We are seeing progress in improving cash flow and product success, such as the recent relaunch of our steam portfolio, and we are also advancing our consumer strategy, which will serve as the foundation for sustainable sales growth and profitability over the long term Miguel Martin, Chairman of the Board of Directors of Aurora.
“We are switching to a more variable cost structure in cultivation by expanding our external supply network and responsibly reducing production from our fixed assets. In November in particular, we closed our Aurora Sun plant and are now reducing production at Aurora Sky to 25% of previous capacity At this production level, we intend to convert the Sky facility into a high-quality cultivation center for our premium varieties and thus better coordinate production with the current demand for premium flowers. “
“Our plan to capitalize on opportunities in the Canadian consumer market coupled with an impressive track record enables Aurora to remain a leader in revenue in the high-margin Canadian medical market. It also gives the company the opportunity to invest in the international medical business. The company is instructing solid growth. After all, we can build on our Reliva CBD brand, which Nielsen ranks # 1 in the US CBD. “
Modified credit facilities and cash balances provide a runway for growth
The Company is pleased to announce that it has entered into a second modified and adjusted credit facility agreement (the “Agreement”) with its existing syndicate of lenders, subject to final documentation. Given Aurora’s sizeable liquidity position, the agreement provides Aurora with greater financial flexibility in executing the business transformation plan by moving the facility to a minimum liquidity agreement rather than a minimum EBITDA agreement and extending the term to December 31, 2022.
There are no changes to the Facility commitment amounts that are currently available $ 101.2 million under the term loan and $ 15 million under the revolver (currently $ 2 million drawn). The second modified and adjusted credit facility has a general security interest in Aurora’s assets and is repayable without penalty at the company’s discretion.
The agreement is based on the company’s “Back to Basics” regulatory strategy for packaged consumer goods. This strategy will delay the company’s ability to generate positive Adjusted EBITDA when management invests in its consumer business. A strategy that the company believes will serve as the foundation for sustainable growth and profitability going forward. The unpredictability of the current demand environment, including the resurgence of COVID-19, also contributes to delaying profitability. But with ~ $ 450 million in cash December 15, 2020Management is confident of its liquidity position and ability to fund its current plan while retaining the option for future opportunities.
Rationalization of the production strategy with the trading strategy
Aurora is increasing its operational flexibility to improve cash flow and better serve consumer needs. This includes moving to a more variable cost structure, using outsourcing and looking for ways to increase throughput of premium products with high margins.
The company has expanded its external supply network through spot purchasing from outsourced third-party providers. Aurora expects to expand the external supply of dried flowers in its brand architecture to reduce cultivation risk and improve the cash conversion cycle.
Aurora Sun & Aurora Sky facilities
Effective December 15, 2020The company closed operations at the Aurora Sun plant and reduced production at the Aurora Sky plant by 75%. Aurora Sky is testing new practices and methods that have proven successful at other growing locations in Aurora’s leading network.
Mr. Martin concluded, “These tough decisions are being made to improve cash flow and make our business more agile. We will continue to make decisions and reshape Aurora in the long-term interests of our shareholders. We look forward to 2021 and announce our business transformation.”
Aurora is a global leader in the cannabis industry, serving both the medical and consumer markets. Headquarters in Edmonton, AlbertaAurora is a pioneer in the global cannabis space helping people improve their lives. The company’s portfolio of brands includes Aurora, Aurora Drift, San Rafael ’71, Daily Special, AltaVie, MedReleaf, CanniMed, Whistler and Reliva CBD. Aurora’s brands deliver innovative, high quality cannabis products to their customers and continue to be industry leaders in medical, performance, wellness and leisure wherever they are introduced. For more information, please visit our website at www.auroramj.com.
Aurora common stock trades on the TSX and NYSE under the symbol “ACB” and is part of the S & P / TSX Composite Index.
This press release contains statements that contain certain “forward-looking information” within the meaning of applicable securities law (“forward-looking statements”). Forward-looking statements are often identified by words such as “plan”, “continue”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “potential” “,” suggested “and other similar words or statements that certain events or conditions” occur “or” will “. The forward-looking statements made in this press release include statements about: the reduction or relocation of Aurora Sky’s business and the anticipated impact on the company’s business as a result; The expected effects of the changes in the credit facility on the company’s business and the expected streamlining of the company’s manufacturing strategy with its business strategy, and the effects on these forward-looking statements are only predictions. Various assumptions have been made in order to reach conclusions or to make the forward-looking statements contained in the forward-looking statements in this press release. Forward-looking statements are based on the opinions, estimates and assumptions of the management in the light of the experience of the management and the perception of historical trends, current conditions and expected developments at the time the statements are made, such as current and future market conditions, the ability to maintain them The VVG- Cost is in line with current expectations, the ability to generate high margin income in the Canadian consumer market, current and future regulatory environments, and future permits and permits. Forward-looking statements are subject to a number of risks, uncertainties and other factors that management believes are relevant and appropriate in the given circumstances and that could cause actual events, results, levels of activity, performance, prospects, opportunities or successes to differ materially projected in the forward-looking statements, including the risks associated with entering the U.S. market, the ability to realize the anticipated benefits associated with the Reliva acquisition, the achievement of Aurora’s business transformation plan, general business and economic conditions, Legislative changes and regulations, product demand, changes in the price of goods needed, competition, the impact of the COVID-19 pandemic and government responses to the COVID-19 pandemic, as well as other risks, uncertainties and factors listed under the heading “Risk Factors” in the annually company information form dated September 24, 2020 (the “AIF”) and filed with the Canadian Securities and Exchange Commission, which are available on the Company’s Issuer Profile on SEDAR at www.sedar.com and are filed and available on the SEC’s website at www.edgar.gov. The company cautions that the list of risks, uncertainties and other factors described in the AIF is not exhaustive and that other factors could also affect results. Readers are cautioned to carefully consider the risks, uncertainties and assumptions in evaluating any forward-looking statements, and are cautioned not to place undue reliance on such information. The company is under no obligation and expressly disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events or for any other reason, unless this is expressly required by applicable securities law.
The company uses for itself financial measures such as adjusted EBITDA, which have no standardized meaning according to the International Financial Reporting Standards (“IFRS”) and may not be comparable to similar measures of other companies (“Non-IFRS Measures”). . For more information on non-IFRS measures, see the company’s management discussion and analysis for the past three months September 30, 2020 and in 2019 under the heading “Warning about Non-GAAP Performance Measures” and the section “Revenue” for the reconciliation to the IFRS equivalent.
SOURCE Aurora Cannabis Inc.