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by Stockwatch Business Reporter
The Canadian Securities Exchange Composite Index fell 7.93 points to 399.02 Monday. Aphria Inc. (APHA) slipped 13 cents to $6.16 on 2.65 million shares after the company announced that its subsidiary, Aphria Diamond, secured an $80-million credit facility for three years with an unnamed Canadian bank paying about 5-per-cent per year. That is low interest for a marijuana stock and reflects positively on how the company's credit risk is viewed by the unnamed bank. The facility is secured by the company's assets. Although the low interest is a positive, Aphria secured the facility at a time when it does not obviously need it.
As chief executive officer Irwin Simon himself pointed out, "Aphria has the largest cash balance in the cannabis industry without the dilution of a strategic partner," with cash and cash-equivalents of $449-million as of Aug. 31, 2019. It is not obvious why a credit facility would be near the top of its list of priorities, then. However, given that the facility is for three years, Aphria may just want to lock the facility in when its balance sheet is strong ($612-million in working capital) and it can ensure that it will pay relatively little interest.
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