Canopy Growth Corporation (TSX:WEED, NYSE:CGC) shares sank on Friday after the Canadian cannabis company said it has entered into redemption agreements with lenders to reduce its debt, which would involve paying cash and converting notes into about 90.4 million Canopy Growth shares.
Canopy noted the move is expected reduce its corporate debt by about $437 million over the next two quarters, and lower its annual interest costs by between $20 million and $30 million.
The company 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 common shares.
The agreement will leave $31.9 million owing under outstanding notes and save the company $92 million in cash, Canopy said.
The company added that 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 debt.
Earlier this year, Canopy revealed plans to lay off 800 workers, or one-third of its workforce, in an attempt to improve its financial situation.
Canopy's US-listed shares dropped 37% in New York at $0.41 while its TSX-listed shares were down 35% to C$0.55 in early Friday trading.
Contact Sean at sean@proactiveinvestors.com