The CEO explained how the company recovered its financial condition through a combination of layoffs, asset sales, deferred equity swaps and “rescue financing.” In addition, the company used social media to raise over $1.2 billion dollars in roughly eight months. Greiper highlighted the average daily dollar volume of Sundial stocks “is incredible, probably one of the ten most liquid names in the cannabis public market which is not an easy thing to achieve since most of the stocks have been in decline.”
George explained that during the pandemic the company saw the effects of the various stimulus payments and the rise of day-trading retail investors, working from home, as a major driver of Sundial's recovery. “Their support and activity were instrumental in enabling us to shape the business to where we are today.”
Sundial’s level of liquidity has allowed the company to improve the cost of capital, however, George explained the company has not raised capital “in quite some time,” and management is “looking to earn the right to take additional risk.”
Sundial’s 'Finance Arm'
Sundial started a finance arm before acquiring Alcanna, one of the largest private-sector retailers of alcohol in North America and the largest in Canada by the number of stores, in March. George explained, the Sundial team realized that economic returns will be generated in financing operations in the cannabis sector.
“In this supposed gold rush, it is really not the gold nor the ‘pick acting as shovels,’ (...) is the financing of those activities was the lion's share of economics has been earned thus far,” George noted, adding that “elevated spreads” and lack of banking access have given birth to instruments like unit warrants transactions, instruments that have created a significant value for investors while many companies are struggling.
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