An MKM Partners analyst says he expects $2-billion worth of writedowns
Aurora Cannabis Inc. appears to have listed its greenhouse in Exeter, Ontario, for sale for $17 million, a move that one analyst said “implies massive writedowns” are coming.
“This listing, for 75 per cent of former MedReleaf’s capacity, signals major writedowns ahead,” MKM Partners analyst Bill Kirk said in a note published Monday. “We are also discouraged with the visibility of Aurora’s strategy — investors were unaware Aurora was trying to sell Exeter,” despite a corporate update on Dec. 23. That same day, Aurora said Chief Corporate Officer Cam Battley would depart.
Kirk said he expects $2-billion worth of writedowns. Aurora’s market value was $2.8 billion at Friday’s close and the company had $3.9 billion of goodwill and intangibles on its balance sheet. “We believe more divestitures are likely, as Aurora has a major cash problem, and this listing only covers about two weeks of cash burn,” he added.
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