Aurora Cannabis Inc. (ACB) Drops After Plans for 1-for-12 Reverse Stock Split

Shares of Aurora Cannabis  (ACB) – Get Report slumped on Monday after the embattled Canadian marijuana producer said it has approved plans for a 1-for-12 reverse stock split, after the company’s shares traded below $1 for more than 30 days.

The Canadian cannabis company on Monday announced the reverse stock split, which is scheduled for May 11, as a way to both regain compliance with rules of the New York Stock Exchange, which require action if a stock trades below a buck for 30 days, and also as a way to boost liquidity.

The move comes as Aurora and other marijuana producers and distributors grapple not only with oversupply but also falling demand for cannabis-infused products amid the coronavirus pandemic, which has also taken its toll on the pot industry.

The Canadian cannabis company had $205 million in cash at the end of March. To raise additional cash, the company said it was planning a renewed “at-the-market” or ATM program to raise additional equity capital on top the roughly $350 million that remains available under its outstanding shelf prospectus.

“The company intends to use a portion of this available capacity to provide further balance sheet strength and preserve flexibility given macroeconomic uncertainty caused by Covid-19,” Aurora said in a statement.