Cannabis producer Hexo eyes US entry with CA$1.2 billion shelf prospectus

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Canadian cannabis producer Hexo Corp. filed a preliminary short form base shelf prospectus that could enable it to raise up to 1.2 billion Canadian dollars ($960 million) in capital over a 25-month period.

Once the prospectus is finalized, Ottawa-headquartered Hexo will be able to issue securities such as common shares, warrants, subscription receipts and units.

According to the preliminary prospectus, Hexo might use the proceeds from the sale of securities for general corporate purposes, to repay debt, expand into the United States and for potential acquisitions, including international expansion, among others.

In the filing, Hexo said its operations and financial position “have not been materially impacted by COVID-19 related issues.”

According to the company, “We have not experienced material disruptions in our labor inputs and cultivation and processing activities, there have been no indicators of material issues to our supply chain, and on the consumer side, product demand has remained stable and cannabis retail has been declared an essential service across Canada and, as such, our provincial distribution remains relatively unimpeded.”

“We currently do not foresee any impact to supply to the market and therefore, any impact on our cultivation, manufacturing and producing activities.”

In February, Hexo entered into a definitive arrangement agreement to acquire rival producer Zenabis Global for approximately CA$235 million.

Zenabis shareholders will vote on the pending deal at a special meeting scheduled for May 13.

British Columbia-based Zenabis lost CA$70 million last year.

Hexo reported a net loss of CA$21 million for its second quarter ended Jan. 31.

Despite the recent losses, Hexo expanded its overall market share in 2020 from an estimated 2.9% in the first quarter of 2020 to 6% one year later.

The company’s shares trade as HEXO on the New York Stock Exchange and Toronto Stock Exchange.

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at