HEXO Equities Warrants Exp 2 Apr 2024 T.HEXO.W.A

RE:RE:RE:NewStrike Summary (Mar 13, 2019)

[mydogchach]

quinlash - (5/27/2021 8:01:19 PM)
RE:RE:NewStrike Summary (Mar 13, 2019)

NewStrike was a good deal back then and it has proven itself every year afterwards through the sale of the UP! products, no one can dispute that


It was a fantastic deal, so good that 9 months later they wrote off $298.2 million - and that $32.0 million facility that went up for sale? Sold for $10.2 million - that was a good deal too.


Hexo Posts Net Loss of $298.2 Million, Effectively Writes Off Newstrike Transaction
 March 30, 2020 9:00 AM  Jay Lutz Hexo Corp
 
Hexo Corp (TSX: HEXO) (NYSE: HEXO) released its second quarter financials this morning, in what might be referred to as a “kitchen sink” quarter given how much the company has impaired in terms of assets. Total net loss for the quarter came in at $298.2 million as a result of the cumulative write offs and impairments.
 
Largely, this is where the bad news begins for current Hexo shareholders.
Here’s a laundry list of the write downs and impairments taken by the company in the second quarter:
 

• Inventory impairment of $16.1 million, compared to an impairment of $23.0 million during the first quarter. Impairment is a result of falling cannabis prices, excess inventory, and sunk costs for package reconfiguration.
• Restructuring costs of $0.3 million connected to the “rightsizing of operations”
• Impairment of property, plant and equipment to the tune of $32.0 million related to the firms facilities acquired from Newstrike Brands which will now be posted for sale
• Impairment of intangible assets by $106.1 million related to the Newstrike Brands assets which are now up for sale.
• Impairment of goodwill to the tune of $111.8 million which is also related to the Newstrike acquisition, effectively writing off nearly the entire transaction less than a year after it closed.
• Realization of onerous contract of $3.0 million, in relation to the ongoing litigation with Medipharm Labs, a contract which has been labeled as being “bad faitth”

Also of interest for current shareholders, is that covenants related to current outstanding debt of $35.0 million with CIBC and BMO requires that the company close on at minimum $40 million in net cash proceeds from the issuance of equities by April 30, 2020. The funding can occur via an at-the-market offering, or via the sale of equity in a funding of at least $15.0 million, either of which must be announced on or before April 10, 2020.