Struggling CBD maker Elixinol Global is offering a 48% discount on shares, hoping to raise $11 million among institutional and and retail investors.
Elixinol is looking for much-needed cash after turmoil beset the company over the last year amid a global downturn in the fortunes of the CBD sector and the coronavirus crisis.
Food unit sale canceled
Most recently, a deal to sell off the company’s Hemp Foods Australia unit for $500,000 was canceled by Yunnan Luxin Biopharmaceutical Co., which cited “non-satisfaction of a condition” in terms of the deal related to the coronavirus crisis, according to Australia’s The Market Herald.
Elixinol announced in January the Australian food unit was up for sale as part of a re-set strategy. The company said it will continue to operate its Australian food unit as it looks at “all potential opportunities available with the business” following the collapsed deal with the Chinese buyer.
Changing management
Management turmoil started with a shakeup last summer when founder Paul Benhaim was reassigned from CEO to Chief Innovation Officer in July before resigning from management of the company in December. Benheim was replaced as CEO by Stratos Karousos, who in late April 2020 was in turn replaced by Oliver Horn, a fomer Swisse Wellness executive.
Also last year, Elixinol was forced to withdraw from the Japanese market due to non-compliance of its products, resulting in a $2.2 million loss.
Karousos said in January the company would focus on its CBD business in the U.S., UK and other European markets where it has infrastructure and production capacity, as it looked to simplify its business model.
Cheap at $500,000?
Hemp Foods Australia, which processes hemp seed, and makes hemp oil, hemp flour and a hemp snack bar, is the largest certified organic hemp food retailer in the southern hemisphere, according to Elixinol.
The company generated $1.3 million in Q1 2020, but reported an EBITDA loss of $200,000.
Radical price crash
Elixinol Global has seen its share price, which reached a high of $4.20 in April 2019, plummet to around $0.22 (22 cents) in recent trading. Elixinol debuted on the Australian Stock Exchange in June 2018.
The new CEO, Horn, said Elixinol is making progress relaunching its CBD brand across global markets.”We’ve secured wide-reaching distribution agreements due to our global reputation for high-quality broad-spectrum CBD products and 20 years of experience in the hemp industry,” he told The Market Herald.