Aurora Cannabis To Close Five Facilities, Cut Jobs

(RTTNews) - Canadian cannabis company Aurora Cannabis said Tuesday it has initiated a plan to close five smaller production facilities over the next two quarters in order to focus production and manufacturing at the company's larger scale sites.

The company will also cut jobs at the corporate and production level as well as reduce third-party consulting and professional spending across the organization.

The job cuts include a nearly 25 percent reduction in Aurora's SG&A staff, most with immediate effect, and an approximate 30 percent reduction in production staff over the next two quarters.

Aurora Cannabis noted that its corporate headcount rationalization was undertaken at all levels, including a restructuring of the executive leadership team and the recently announced retirement of President Steve Dobler.

The company said it will close the five smaller scale facilities at Aurora Prairie, Aurora Mountain, Aurora Ridge, Aurora Vie and Aurora Eau. However, it expects that part of the Aurora Vie facility in Quebec will remain operational to allow for the manufacturing of certain higher margin products.

By the end of the fiscal second quarter of 2021, Aurora Cannabis intends to consolidate its Canadian production and manufacturing at Aurora Sky, Aurora River (EU-GMP certified), Whistler Pemberton, and Polaris.

The company has previously said that it scaled back the Aurora Sun production facility to six grow bays and will allow for efficient scale production on an as-needed basis as market demand grows.

As part of the transition, Aurora Cannabis plans to immediately ramp up cannabis production at its Nordic facility in Europe from which it expects to adequately service the European market with EU-GMP certified product.

In connection with the reorganization, Aurora Cannabis expects to record production asset impairment charges of up to C$60 million in the fourth quarter of 2020. The company also expects to record a charge of up to C$140 million in the carrying value of certain inventory.

The company said it anticipates the production facility closures will be accretive to its gross margin.

In May, Aurora Cannabis announced its entry into the lucrative U.S. cannabis market with its acquisition of Massachusetts-based Reliva LLC, a seller of hemp-derived cannabidiol or CBD products.