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Sunday, May 22, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

Business

Hexo slashes 230 jobs after Belleville facility shutdown

Approximately 565 jobs have been cut off this year

HEXO shuts down Belleville facility
A Hexo worker prepares a cannabis clone at the company's Belleville, Ontario facility. Photo via Hexo

Canadian pot producer Hexo Corp. (TSX: HEXO) (Nasdaq: HEXO) is shutting down part of the operations at its Belleville facility and moving them to other sites to save money.

On Thursday, the Quebec-based cannabis producer said the shutdown of the facility will impact 230 employees but is working closely with them to reduce the impact of the decision by offering career counselling and other transitional services.

However, Hexo said the Truss Beverage Co. operations –a joint venture between producer and beer maker Molson Coors– will not be impacted by the transition and will continue to operate out of the Belleville facility.

All of the manufacturing machinery and equipment at the Belleville facility will be transferred to other sites and the transition of operations will be completed by July.

Hexo’s COO Charlie Bowman said in a statement that after an extensive review of each site’s capabilities the company identified this operational closure and transition as an opportunity for optimization.

He added the closure will leverage other sites with available infrastructure to improve production outputs while significantly reducing costs across the company’s network.

“This is a critical next step for Hexo as we continue to make strides towards becoming cash flow positive from operations,” Bowman said.

Read more: Hexo slashing 180 jobs to save $15M annually

Read more: Hexo to shutter 3 production sites in early 2022

“I would like to thank our Belleville community partners and employees for their invaluable contributions to Hexo’s growth and success,” Hexo President and CEO Scott Cooper said.

“This was a very difficult decision, but it is a key component of executing on our strategic plan, and one that we believe best positions Hexo for profitable growth.”

In early March, Hexo said it’s working with its competitor and leading producer Tilray Brands, Inc. (Nasdaq: TLRY) (TSX: TLRY) on a new debt financing agreement where Tilray has agreed to acquire US$211 million of senior secured convertible notes that were originally issued by Hexo to HT Investments MA LLC, and acquire a significant equity ownership position in Hexo.

In February, the company said it was cutting 180 jobs to save about $15 million per year. Of the 180 positions the firm dropped, half are from the planned closure of its Stellarton facility announced last year. The rest of the jobs are cut from back-office positions.

In November, the company announced the shut down of three production sites it acquired from buying Zenabis Global Inc. and 48North Cannabis Corp. The shutdowns impacted around 155 employees. Two Ontario facilities were shut down in January this year and the third one in Nova Scotia was shut down in February.

 

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