In what is believed to be the largest prospectus by a cannabis company, Canada’s Canopy Growth has filed a $2 billion shelf prospectus.
The preliminary short-form base shelf prospectus enables the company to raise up to $2 billion (2.5 billion Canadian dollars) in one or more series or issuances of securities over a 25-month period.
Such a move may indicate that the company wants to replenish its cash reserves.
The company’s coffers held as much as CA$4.1 billion at the end of 2018 but were down to CA$825 million in cash as of 2020. Canopy has said that it had negative cash flow for both the fiscal year ended March 31, 2020, and the nine-month period ended Dec. 31, 2020.
The company would be able to issue common shares, subscription receipts, warrants and units for a 25-month period “or any combination thereof in one or more series or issuances up to an aggregate total offering price of US$2,000,000,000,” according to the filing.
The preliminary short-form base prospectus touched on the Covid-19 impact and the company wrote:
Management has continued to closely monitor the impact of the COVID-19 global pandemic, with a focus on the health and safety of the Corporation’s employees, business continuity and supporting its communities. The Corporation established a COVID-19 Management Committee shortly after the declaration of COVID-19 as a global pandemic and implemented various measures to reduce the spread of the virus. The Corporation has continued to operate under preventative measures and has experienced minimal disruption to its production and supply chain.
As of the date of this Prospectus, all 33 of Canopy Growth’s corporate-owned retail stores are open and offering click-and-collect and in-store shopping. Canopy Growth’s Canadian medical business, which operates as an e-commerce channel, has continued largely unchanged. Canopy Growth’s international medical business operates primarily as a pharmacy model, with pharmacies being deemed essential businesses in Germany and other European countries in which Canopy Growth conducts business. In addition, since Canopy Growth’s non-production workforce continues to effectively work remotely using various technology tools, Canopy Growth is able to maintain its full operations and internal controls over financial reporting and disclosures.
Given the uncertainties associated with the COVID-19 pandemic, including those related to the use of Canopy Growth’s products by consumers, disruptions to the global and local economies due to related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations and a reduction in discretionary consumer spending, the Corporationis unable to estimate the impact of the COVID-19 pandemic on its business, financial condition, results of operations, and/or cash flows. The uncertain nature of the impacts of the COVID-19 pandemic may continue to affect the Corporation’s results of operations for the balance of fiscal 2021.
Canopy Growth believes it has sufficient liquidity available from cash and cash equivalents and short-term investments on hand of approximately C$825.0 million and C$768.6 million, respectively, as of December 31, 2020, and from available capacity under its revolving debt facility to enable Canopy Growth to meet its working capital and other operating requirements, fund growth initiatives and capital expenditures, settle its liabilities, and repay scheduled principal and interest payments on debt.
Canopy’s shares trade as CGC on the Nasdaq and WEED on the Toronto Stock Exchange.