Alcanna Inc (OTCMKTS:LQSIF) completed the secondary offering of 9.2 million shares of an entity (selling shareholder) owned by Aurora Cannabis Inc (NYSE:ACB).
Underwriters for this deal
The selling shareholder receives $27.6 million by issuing the shares each at $0.3 at through short form prospects. CIBC World Markets Inc., AltaCorp Capital Inc., and Cormark Securities Inc. are the underwriters for this bough-deal offering. Following this deal, 1.750 million share purchase warrants received by the selling shareholder from Aurora is canceled.
Q1 2020 financial results
Alcanna achieved a sales growth of 28.1% to CAD 162.117 million in Q1 2020. In Canada, the same-store liquor sales surged by 10.7% in Q1 2020. The company also posted significant growth of 144.6% in cannabis sales to $9.3 million in Q1 2020, compared to the same period last year.
Higher growth in 3 weeks of March 2020
Alcanna reported a significant growth in cannabis and liquor stores in the last three weeks of March 2020. However, stockpiling later declined on the assurance by the state and provincial governments to the consumers that cannabis and liquor will remain during coronavirus crises as essential services. The same-store liquor sales in the first two months of Q2 edged up by 12% compared to the same period in 2019.
Staying at home scenario changed consumers’ habits and resulted in the shutdown of the on-premise loungers, restaurants, and bars. As a result, Alcanna is enjoying better than expected sales. The social distancing rules and restrictions on mass gathering will remain in place with on-premise establishments begins to open. However, Alcanna expects to post higher sales because the changed habits of consumers will continue in the foreseeable period on health concerns posed by ongoing coronavirus crisis.
The spending on promotional activities declined in the first two months of Q2 and helped improve Alcanna’s margins.
Divests Liquor Stores North USA
Alcanna divested its indirectly owned auxiliary unit – Liquor Stores North USA Inc to Afognak Native Corporation’s subsidiary. The company will receive proceeds of $21.4 million from Afognak. Alcanna will invest some of the proceeds in cannabis retail businesses and Canadian liquor operations besides using for reducing the debt.