Quebec cannabis producer Hexo to lay off 450 employees

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New blow for the former Quebec flagship. The cannabis producer announced a net loss of 146 million Canadian dollars (108 million euros) for the February-April quarter, i.e. a loss of 953.8 million Canadian dollars (707 million euros) for the first nine month of its 2022 financial year.

The turnover of the Quebec company fell by 14% to reach 45.6 million Canadian dollars in the third quarter.

“The company now believes that it will not realize the synergies and incremental cash flow increases at the level estimated in its previous guidance and it expects these numbers and metrics to be lower than previous guidance,” noted Hexo in a press release.

Hexo had previously pledged to be the only major Canadian cannabis producer to be cash flow positive and had propelled itself as Canada’s 3rd largest recreational cannabis producer following the takeover of one of its competitors, Redecan.

The Quebec company said it was reducing its workforce by 450 positions, which is expected to result in cost savings of C$30.6 million. At the same time, Hexo has spent C$7.8 million on severance pay for big executive jobs this year.

HEXO is committed to streamlining its operations across all functions. This allows our best-selling brands to remain competitive in the marketplace while aligning with our long-term financial goals. We look forward to sharing additional details in our third quarter results the company told MJBizDaily.

The rapprochement with Tilray is mechanically changed. Hexo’s debt will now be converted at a price of C$0.40 per share, approximately half of the $0.85 per share previously agreed. Shares of the company were trading at around C$0.21 at the time of writing on the Toronto Stock Exchange.

The changes could eventually give Tilray up to 50% Hexo, up from an estimated 35%.

“The strategic partnership with Tilray Brands significantly improves HEXO’s capital structure and provides the opportunity to accelerate our growth in global markets,” Charlie Bowman, President and CEO of Hexo, said in a statement.

“Tough stock market conditions necessitated changes to the agreement, but this is a critical step to unlocking the shareholder value held by the company. »

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