NEWS FILE PHOTO
There is no news on the local Aurora facility following the stepping down of the company's CEO, 500 layoffs and further curbing of capital spending were announced Thursday.
cgallant@medicinehatnews.com@CollinGallant
Aurora Cannabis is further slashing capital spending and jobs, as well as seeking a new CEO, the company announced Thursday night in an attempt to regain confidence of investors and the “broader financial community” with a drive to make the company profitable this year.
While not specifically addressing the immediate plans for the local Aurora Sun facility – already scheduled for only partial opening this year – the plan outlined this week puts more doubt on when the massive greenhouse will be operating and at what level.
“These changes represent the start of a fundamental change in focus for Aurora as we look to generate sustainable, profitable growth,” said interim CEO Michael Singer. He replaces Terry Booth, who founded the Edmonton-based cannabis company and will remain on as an adviser.
The company also laid off 500 employees, with about 25 per cent in corporate offices, added two independent directors to its board, and says it will curtail global expansions where the markets are slower to develop than expected.
“We remain firmly of the opinion that a tremendous global opportunity still exists, but Aurora needs to rationalize the business today and drive as quickly as we can to generate positive cash flow,” said Singer.
The only mention of the Sun facility came in a conference call with investment houses. Singer stated that a $97-million credit facility that is designated for Sun completion will not be accessed as the company hopes to firm up its balance sheet.
The News has learned that on Jan. 28, local Aurora officials met with contractors and described staff reductions and changes. It is not immediately clear how the new capital spending estimate will be broken up among Aurora’s facility projects.
A detailed evaluation of all capital projects is underway, said officials, and will see a restructuring of spending plans related to technology, sales and marketing, travel and entertainment, professional services and non-revenue generating third-party costs.
The news comes before next week’s quarterly financial report is set to be released. It is expected to show poorer than expected revenue that forced a slate of strategic actions in November hasn’t improved.
At that time the company announced that Aurora Sun would only bring six grow rooms on line in 2020 – out of 36 – at the 1.6 million-square-foot facility that began construction in late 2018. That amounts to about 18 per cent of the building that the company said could produce about 260 tonnes of dried flower per year at full capacity.
Afterwards the company made great effort to paint the announcement not as a halt, but that it would potentially reach full operations in 2021.
Officials said Thursday that low-cost production at its largest greenhouse class, including one in operation in Leduc, would provide enough production for the foreseeable future.
Booth said in a statement that he supported the moves.
“These changes, along with the financial transformation which we are undertaking, should clearly demonstrate to investors that Aurora has the continuity, strategic direction and leadership it needs to transition from its entrepreneurial roots to an established organization well positioned to capitalize on a global growth opportunity,” he said in a statement.
He noted that he is both “proud” and “humbled” to have led the company, but feels “the timing is right” to step away.
Aurora is one of the world’s largest cannabis companies with operations in 25 countries and 17 subsidiaries, including MedReleaf, CanvasRX and CanniMed Therapeutics. It has invested in and formed strategic partnerships with brands including Choom Holdings Inc. and High Tide Inc.
Its stock has plummeted in value in recent months and often hovers between $2 and $4. The shares lost 14.4 cents or 5.2 per cent on Thursday to close at $2.66 on the Toronto Stock Exchange.
The company’s announcement comes just after Tilray Inc. announced on Tuesday the layoff of 10 per cent of its workforce in an effort to cut costs. The company — with a total head count of about 1,443 — said the move would help it better meet the needs of the industry and foster growth in 2020 and beyond.
Aurora is far from the first North American cannabis company to be hit with executive “departures” this year. TerrAscend Corp., Sundial Growers Inc., Supreme Cannabis Co, MedMen Enterprises Inc. and Flowr Corp. have all seen leadership exits in the last month.
