Revised Credit Facility Terms Supports
Execution of Business Transformation Plan that Focuses on
Long-Term, Sustainable Revenue Growth & Improving Operating
Cashflow
- Credit facility terms improved including maturity
extension to December
2022
- ~$450 million of cash on
balance sheet & improving cashflow positions company to drive
sustainable, long-term revenue growth
- Production volumes now aligned to sales by adopting a
more agile, variable cost model
- Expects fiscal 2021 Q2 Adjusted EBITDA loss to improve
from Q1 despite a resurgence of Covid-19 restrictions in key
markets
NYSE | TSX: ACB
EDMONTON, AB, Dec. 16, 2020 /PRNewswire/ - Aurora Cannabis
Inc. (the "Company" or "Aurora") (NYSE: ACB) (TSX: ACB), the
Canadian company defining the future of cannabinoids worldwide,
today provided a business update.
"Our substantial liquidity position has enabled us to revise our
credit facility terms by extending maturity and transitioning us
from a minimum EBITDA covenant to a minimum liquidity covenant,
thereby providing us with the financial flexibility we need to
execute our business transformation plan. We are already
seeing progress with improving cashflow and product successes such
as the recent relaunch of our vapour portfolio. We are also
driving our consumer strategy that will serve as a foundation for
sustainable revenue growth and profitability over the long-term"
stated Miguel Martin, Chief
Executive Officer of Aurora.
"We are moving to a more variable cost structure in cultivation
by expanding our network of external supply and responsibly scaling
back production from our fixed asset network. Specifically, in
November we closed our Aurora Sun facility and are now scaling back
production at Aurora Sky to 25% of its previous capacity. At this
level of production, we intend to transform the Sky facility into a
high-value cultivation center for our premium strains, and in turn,
better align production with current demand for premium
flower."
"Our plan to address the opportunities in the Canadian consumer
market, combined with a formidable balance sheet, positions Aurora
to remain the leader by revenue in the high-margin Canadian medical
market. It also allows the Company to invest in the international
medical business, which is exhibiting solid growth. Lastly,
we will be able to build on our CBD brand Reliva, which is #1
ranked by Nielsen in U.S. CBD."
Amended Credit Facility and Cash Balance Provides Runway for
Growth
The Company is pleased to announce that it has reached an
agreement, subject to definitive documentation, regarding a second
amended and restated credit facility (the "Agreement") with its
existing syndicate of lenders. Given Aurora's substantial liquidity
position the Agreement provides Aurora with greater financial
flexibility to execute the business transformation plan by
transitioning the facility to a minimum liquidity covenant rather
than a minimum EBITDA covenant and extends the maturity to
December 31, 2022.
There are no changes to the commitment amounts under the
facility which currently stand at $101.2
million under the term loan and $15
million under the revolver (currently $2 million drawn). The second amended and
restated credit facility has a first ranking general security
interest in the assets of Aurora and can be repaid without penalty
at the Company's discretion.
The Agreement is predicated on the Company's "back to basics"
regulated consumer packaged goods strategy. This strategy will
delay the Company's ability to achieve positive Adjusted EBITDA as
management invests in its consumer business; a strategy that the
Company believes will serve as a foundation for sustainable growth
and profitability in the future. Also contributing to the
profitability delay is the unpredictability of the current demand
environment, including the resurgence of COVID-19. However,
with ~$450 million in cash on hand as
of December 15, 2020, management is
confident in its liquidity position and its ability to fund its
current plan, while maintaining optionality for future
opportunities.
Rationalizing Production Strategy with Commercial
Strategy
Aurora is increasing its operational flexibility to improve its
cashflow and better address consumer needs. This entails shifting
to a more variable cost structure, leveraging outsourcing, and
exploring opportunities to increase throughput of high margin
premium products.
The Company has expanded its network of external supply by
implementing spot purchasing of outsourced third-party supply.
Aurora expects to further expand external supply of dried flower
across its brand architecture to reduce cultivation risks and
improve its cash conversion cycle.
Aurora Sun & Aurora Sky Facilities
Effective December 15, 2020, the
Company has shuttered operations at the Aurora Sun facility and
reduced production at its Aurora Sky facility by 75%. Aurora
Sky is testing new processes and methodologies proven successful at
other cultivation sites in Aurora's leading network, combined with
increased focus on innovation led by deep plant science and
genetics expertise.
Mr. Martin concluded "These hard decisions are being taken to
improve cashflow and provide agility to our business. We will
continue to make decisions and transform Aurora in the long-term
best interests of our shareholders. We look forward to 2021
and providing updates on our business transformation."
About Aurora
Aurora is a global leader in the cannabis industry serving both
the medical and consumer markets. Headquartered in Edmonton, Alberta, Aurora is a pioneer in
global cannabis dedicated to helping people improve their lives.
The Company's brand portfolio includes Aurora, Aurora Drift, San
Rafael '71, Daily Special, AltaVie, MedReleaf, CanniMed, Whistler,
and Reliva CBD. Providing customers with innovative, high-quality
cannabis products, Aurora's brands continue to break through as
industry leaders in the medical, performance, wellness and
recreational markets wherever they are launched. For more
information, please visit our website at www.auroramj.com.
Aurora's common shares trade on the TSX and NYSE under the
symbol "ACB", and is a constituent of the S&P/TSX Composite
Index.
Forward Looking Statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable
securities law ("forward-looking statements").
Forward-looking statements are frequently characterized by words
such as "plan", "continue", "expect", "project", "intend",
"believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. Forward-looking
statements made in this news release include statements regarding:
scaling back and shift of operations at Aurora Sky and the
anticipated effects on the Company's business as a result thereof;
the anticipated effects of the amendments to the Credit Facility on
the Company's business, and the anticipated rationalization of the
Company's production strategy with its commercial strategy, and the
effects on the These forward-looking statements are only
predictions. Various assumptions were used in drawing the
conclusions or making the projections contained in the
forward-looking statements throughout this news release. Forward
looking statements are based on the opinions, estimates and
assumptions of management in light of management's experience and
perception of historical trends, current conditions and expected
developments at the date the statements are made, such as current
and future market conditions, the ability to maintain SG&A
costs in line with current expectations, the ability to achieve
high margin revenues in the Canadian consumer market, the current
and future regulatory environment and future approvals and permits.
Forward-looking statements are subject to a variety of risks,
uncertainties and other factors that management believes to be
relevant and reasonable in the circumstances could cause actual
events, results, level of activity, performance, prospects,
opportunities or achievements to differ materially from those
projected in the forward-looking statements, including the risks
associated with: entering the U.S. market, the ability to realize
the anticipated benefits associated with the acquisition of Reliva,
achievement of Aurora's business transformation plan, general
business and economic conditions, changes in laws and regulations,
product demand, changes in prices of required commodities,
competition, the effects of the COVID-19 pandemic and responses of
Governments to the COVID-19 pandemic, and other risks,
uncertainties and factors set out under the heading "Risk Factors"
in the Company's annual information form dated September 24, 2020 (the "AIF") and filed
with Canadian securities regulators available on the Company's
issuer profile on SEDAR at www.sedar.com and filed with and
available on the SEC's website at www.edgar.gov. The Company
cautions that the list of risks, uncertainties and other factors
described in the AIF is not exhaustive and other factors could also
adversely affect its results. Readers are urged to consider the
risks, uncertainties and assumptions carefully in evaluating the
forward-looking statements and are cautioned not to place undue
reliance on such information. The Company is under no obligation,
and expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as expressly
required by applicable securities law.
The Company uses financial measures regarding itself, such as
Adjusted EBITDA, that do not have standardized meaning under the
International Financial Reporting Standards ("IFRS") and may not be
comparable to similar measures presented by other entities
("non-IFRS measures"). Further information relating to non-IFRS
measures, is set out in the Company's management discussion and
analysis for the three months ended September 30, 2020 and 2019 under the heading
"Cautionary Statement Regarding Non-GAAP Performance Measures" and
the "Revenue" section for reconciliation to the IFRS
equivalent.
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SOURCE Aurora Cannabis Inc.