Hexo outlines cost cutting plan

Hexo outlines cost cutting plan

Outside of Hexo Canada’s Centre of Excellence in Belleville. (Photo: David Foot / Quinte News)

Hexo Corporation is planning to cut costs to help the business finance its latest acquisition.

The company stated today (Wednesday) in a release it plans to reduce its selling, general and administrative expenses by 30% by the end of its fiscal 2023.

The cuts are expected to generate as much as $175 million in new cash flow as the company attempts to meet terms of a debt financing deal used to help finance their acquisition of Redecan Pharm.

According to BNN Bloomberg, Hexo also said they identified approximately $30 million in additional savings by optimizing assets.

The company will also be “right-sizing the organization” and sold a 25% interest in the Belleville production facility to Olegna Holdings Inc. for $10.1 million.

Hexo’s CEO and President Scott Cooper stated in a release “It is a strategic imperative for Hexo to strengthen its capital position and restructure the company’s operations to ensure a path to achieving positive cash flow from operations within the next three quarters.”

Last month, Hexo announced a strategic plan to reduce costs, streamline its business and improve growth amid a string of losses, mounting debt and misaligned supply and demand dynamics.

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