Canadian marijuana producer Canopy Growth (WEED) has reached a deal with its lenders to reduce its debt load by $437 million, including paying cash and converting notes into company stock.
Canopy Growth said the arrangement will enable it to reduce its substantial debt by $437 million over the next two quarters, and lower its annual interest costs by as much as $30 million.
The Smiths Falls, Ontario-based company, which was once Canada’s biggest cannabis producer, is struggling with declining sales, mounting debt, and a deflating share price.
Earlier this year, the company announced 800 staff cuts, which represented about one-third of its total workforce.
Under terms of the deal reached with its lenders, Canopy Growth said $193 million of $225 million in existing notes will be redeemed on July 15 for a mix of common shares and unsecured, non-interest-bearing debentures, which holders can convert into its common stock.
The company said it will also pay $93 million in cash to reduce $100 million in principal indebtedness, and direct proceeds from some asset sales to reduce its total debt, which stood at $1.3 billion on March 31 of this year.
Canopy Growth’s stock has declined 84% year to date and its shares currently trade for only $0.51 each.
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