Licensed Canadian cannabis company Aurora Cannabis is selling one of its greenhouses at an asking price of C$17 million, according to a Barron’s report. An Aurora representative indicated the non-operational greenhouse was “inherited” by the company following its 2018 acquisition of MedReleaf and “would require retrofit and significant capital investment in order to meet Aurora’s production standards.”
MedReleaf had purchased the greenhouse in 2018 for $21.5 million in cash and 225,083 shares of stock, according to a Financial Post report.
“The company has taken decisive steps to rationalize capital expenditures and align our cultivation footprint to current demand, including selling the Exeter facility. We expect that our production capacity, including the anticipated completion of six grow rooms at Aurora Sun to be sufficient for near term demand.” – Aurora, in a statement to Barron’s
Last November, Aurora announced it would be stopping construction on the Aurora Sun facility along with a facility in Odense, Denmark, according to the Post.
The listing comes as Aurora has seen its stock price plunge 63 percent over a 52-week period. The 2018 all-stock MedReleaf deal was valued at C$3.2 billion and reportedly gave Aurora a production capacity of 570,000 kilograms (about 1,256,635 pounds).
Bill Kirk, executive director at MKM Partners, an institutional research company, said selling the greenhouse at the asking price would only represent two weeks of cash burn for Aurora. He added that “with profitability timing uncertain, Aurora’s obligations will continue to be difficult to meet.” Kirk noted that the firm is also “discouraged with the visibility” of Aurora and that “investors were unaware” the company was trying to sell the Exeter greenhouse.
The greenhouse would be the third tangible asset Aurora has decided to sell or put on hold since the company was founded in 2015, the Post reported.
Daniel Sax, the founder and CEO of cannabis real estate investment company Sensi Properties, told the Post that while new agricultural companies are “certainly” looking for new greenhouse space, Aurora’s price might be high.
“Prices being paid a year and a half ago were way above traditional costs on agriculture greenhouses,” he said in the report.
Aurora stock closed down 5.24 percent following reports that the Exeter facility was put on the market.
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