Oh and by the way - I can hardly wait to see Tammy Chen's updated price target for Hexo - you'll recall she's about the only analyst who had a buy and a high price target (and works for.....BMO)
quinlash - (5/3/2021 8:32:58 AM)
RE:Hexo Repays $28.9 Million BMO Credit Facility Ahead Of Sched From what I can see in the HEXO news the Bank of Montreal (BMO) did not request that HEXO pay back monies owing, HEXO simply decided it was in the company's best interest to do so in order to position itself better for it's future plans.
HEXO, as per last QTR report, had a quarter of a billion dollars (CDN) in cash and liquid assets so they opted to use a very small part off that to pay off outstanding debt.
As far as it goes for BMO stepping away from Cannabis... BMO was the first bank in Canada to support the Cannabis Sector and even in 2021 they have been reported as again lending monies to Cannabis companies in 2018, 2019, 2020 and 2021
First of all, Hexo last financials show cash of $129,355 at Jan 31/21. Why would you say the number was "
had a quarter of a billion dollars (CDN) in cash" - line items such as Accounts Receivable ARE NOT liquid assets. Do some research.
Second, despite one of the first to enter cannabis sector financing - with Canopy - they have obviously made a decision that it wasn't what everyone thought it was going to be. They are 'culling' the riskier and undesired loans such as Hexo and OGI - who they have financed at low rates (Hexo had a 2.5% interest rate on the loan).
Also, Hexo was in non-compliance with a covenant of the loan last year - which states that they aren't allowed to have any other CDN fudns bank/finance accounts. This voluntary repapyemnt likely relates to that - and the upcoming dilutiion of $1.2 billion puvblic offering.
So - always good to pay off a loan if you have the cash, but in Hexo's case there are more reasons that SSL spinning it to relate it to 'U.S. opportunities and expansion' (something he says once a day if he can)
Easy to pay off a loan when you can replace it with a $1.2 billion Public Offering with free money from shareholders.