Canopy Growth shares fall after it agrees to convert debt into stock in deal with Constellation Brands

Canopy Growth Corp.
CGC,
-16.29%
WEED,
-17.37%
fell 17% in premarket trades on Thursday after the company said it reached an agreement with Constellation Brands Inc.
STZ,
-4.36%
to convert about $198 million of convertible debt into stock. Constellation agreed to acquire between 21.93 million or 5.4% of Canopy stock and 30.7 million shares or 7.6% of Canopy stock that will convert from debt. The prices for the stock will range from $2.50 a share to $3.50 a share. Canopy Growth CFO Judy Hong said the transaction will address a “substantial portion” of its soon-to-mature convertible debt and will help the company de-leverage its balance sheet and reduce interest payments by more than C$10.9 ($8.44 million) each year. “These actions are critical as we navigate broader economic headwinds and will enable us to continue investing in the highest potential areas of our business to drive future growth,” Hong said.