Hexo raises capital but doesn’t learn its lesson

You would think the sting of a 30% stock price drop after Hexo Corp.’s preannouncement of a huge miss for fiscal fourth-quarter revenue and withdrawal of 2020 revenue guidance would have persuaded company management to introduce some conservatism when communicating with investors.

It didn’t.

On Wednesday, Hexo issued CA$70 million three-year convertible debentures at 8.0% interest and convertible into common shares at CA$3.16.

It is a positive that Hexo – which trades on the Toronto Stock Exchange and New York Stock Exchange – has locked up much-needed capital to fund its operations, but it is very expensive capital.

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