Canadian cannabis producer Canopy Growth plans to seek approval to consolidate its shares after the Smiths Falls-based company was notified by the Nasdaq that it does not meet the stock exchange’s listing standards.
Maintaining a minimum bid price of at least $1 per share is one of the Nasdaq’s listing requirements.
However, the closing bid price of Canopy’s shares has been below $1 per share for 30 consecutive business days.
Under the Nasdaq rules, Canopy has 180 calendar days from the issuance of the letter on July 11 to regain compliance.
The shares will continue to be traded on the exchange in the meantime.
In Canada, Canopy lists on the Toronto Stock Exchange. The Nasdaq warning doesn’t affect that listing.
In a news release, Canopy said it is evaluating all “available options” to resolve the deficiency and regain compliance.
To that end, Canopy plans to seek permission from shareholders to consolidate its shares at the company’s next annual meeting, which is set for Sept. 25.
The proposal will consist of a consolidation range between one post-consolidation common share for every five to 15 outstanding pre-consolidation common shares.
Under the proposal, Canopy Growth’s board would have permission to execute the share consolidation until Sept. 25.
A number of other Canadian cannabis producers received similar warnings in the past year.
Early last year, Quebec-based Hexo Corp. and Calgary-headquartered Sundial Growers also received notices from the Nasdaq that they were not compliant with the exchange’s continued listing standards.
Those warnings prompted share consolidations for both businesses.
Separately, on July 13, 2023, Canopy entered into negotiated redemption agreements with holders of its 4.25% convertible senior notes, which had been due July 15.
Under the agreements, Canopy redeemed approximately 193 million Canadian dollars ($160 million) of the aggregate principal amount for cash newly issued common shares, and newly issued unsecured convertible debentures.
That will consist of:
- CA$101 million in cash.
- The issuance of 90,430,920 shares.
- The issuance of approximately CA$40.4 million of debentures.