Aurora Cannabis trims credit facility, amends financial covenants

By Rebecca Melvin

New York, Feb. 7 – Aurora Cannabis Inc. said it has amended its secured credit facility to remove EBITDA ratio covenants and reduce facility size.

The amendments include complete removal of all EBITDA ratio covenants, originally set to commence in the period ending Sept. 30, 2020, and complete removal of the fixed-charge coverage ratio covenant, according to a news release on Friday.

The total funded debt-to-equity covenant will be adjusted to 0.20 to 1 from 0.25 to 1, beginning in the fiscal third quarter 2020.

The total facility size available will be reduced by C$141.5 million, and a new minimum liquidity covenant of C$35 million is being introduced.

A covenant requiring Aurora to achieve positive EBITDA thresholds beginning in fiscal first quarter 2021 is also being added.

The changes reached with its syndicate of banks provide Aurora with additional financial flexibility aligned with its focus on achieving near-term profitability and give the company options to refinance the facility at maturity, chief financial officer Glen Ibbott said in the release.

The company also announced that it eliminated close to 500 full-time equivalent staff, including about 25% of corporate positions, and cut capital expenditure plans as measures to strengthen the company.

Capital expenditures for the second half of fiscal 2020 are expected to be cut to below C$100 million, and some assets and goodwill values as of Dec. 31, 2019 that exceed current fair-market valuations will be written down.

In addition, founder and chief executive officer Terry Booth is retiring, and chairman Michael Singer has been appointed as interim CEO, effective immediately. Booth will remain a senior strategic advisor to the board and director.

Aurora Cannabis is an Edmonton, Alta.-based cannabis company.

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