Stockwatch Article If anyone has a logical reason to explain why SSL just couldnt be satisfied having Gatineau and Belleville until the market actually called for something more - please share.
$1.5 BILLION in unecessary acquisitions - including overpaying for Redecan - most of which are now shuttered.
Hexo should have, could have - actually been something.
Meanwhile, with nearly as much predictability as the monthly reports from StatsCan, more unwelcome news arrived from Hexo Corp. (HEXO), down two cents to 54 cents on 7.03 million shares. The company announced last night that it is making "changes to further streamline operations on [its] path to becoming cash flow positive." Stripped of the colourful spin (really a sea of red flags), Hexo is cutting hundreds of jobs and closing one of its most important facilities in Canada.
The facility is the 932,000-square-foot Belleville plant in Ontario, Hexo's main production facility for processing, extraction and packaging (but not cultivation -- its main cultivation facility is in Gatineau, Que.). Hexo has been leasing this facility for about $5-million a year from an entity owned by one of its directors, Vincent Chiara. It used to own a 25-per-cent interest in the facility, but sold it to Mr. Chiara's company in January for $10.1-million, again citing cost-cutting reasons. Now it is walking away.
"After an extensive review of site capabilities, we have identified this operational closure and transition as an opportunity to further optimize our network," said acting chief operating officer Charlie Bowman. He said Hexo will distribute Belleville's current activities to other facilities. It has several, thanks in part to a 2021 shopping spree in which it bought Zenabis Global, 48North and Redecan. To be clear, Hexo has already decommissioned some of the facilities since those takeovers, meaning that today's laid-off employees will be joining a much longer list.
Today's closure also comes shortly after Hexo firmed up its so-called "strategic alliance" with Tilray Inc. (TLRY: $6.64). As discussed in Stockwatch in April 12, Tilray is exacting a heavy price from Hexo, not least of which is an annual "advisory service" fee of no less than $18-million (U.S.). Hexo has claimed that the relationship is still highly beneficial because the two of them will be able to enjoy "synergies" and "efficiencies" together. This will be cold comfort to employees at Belleville and potentially other facilities awaiting the axe. As for investors, they have not been enjoying themselves for quite some time. The stock has cratered to 54 cents from last year's high of $14.