David George-Cosh

Reporter

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Hexo Corp. is laying off 180 staff in the pot giant's latest move to cut costs amid an urgent push to become profitable and avoid defaulting on one of its loans.

The Gatineau, Que.-based company said Wednesday the staff cuts - half of which come from closing its production facility in Nova Scotia - will help save $15 million a year.

“Today’s announcement was not an easy one to make," said Scott Cooper, Hexo's chief executive officer and president, in a statement. "We are working with all impacted employees to the best of our ability to ensure that they are treated fairly and provided the support necessary to assist with this transition."

The layoffs are part of Hexo's turnaround plan, which was first disclosed in December. The plan is expected to generate approximately $37.5 million this fiscal year in new cash flow and about $135 million in its next fiscal year.

The cost savings are aimed at pushing Hexo to report positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) as quickly as possible to avoid breaking a covenant on a debt financing deal announced in May 2021. The deal raised US$360 million in senior secured convertible notes from New Jersey-based hedge fund High Trail Capital LP that was used to acquire Redecan Pharm last year.

The announcement also comes a week after a major Hexo shareholder announced plans to nominate five independent directors to the company's board at an upcoming shareholders’ meeting next month.