Aurora Cannabis Inc. ACB, -2.88% ACB, -1.88% said Tuesday that about 94% of the holders of its C$230 million ($174 million) of 5% unsecured convertible debt that matures in March of 2020 have elected to convert their debt into stock. The company said last week it would offer all holders of the notes the opportunity to voluntarily convert them at an amended early conversion ratio to be determined using an amended early conversion price equal to a 6% discount over the stock's five-day volume weighted average trading price on the Canadian and U.S. exchanges. The move weighed heavily on the stock as the transaction is expected to be highly dilutive. ""It's a terrible precedent to set" and "an incredibly desperate set of measures," according to Craig Behnke, equity analyst at Marijuana Business Daily's Investor Intelligence unit. The move has diluted the shares of anyone who bought them at the market peak earlier this year, he said. "Investors will likely be very reluctant to invest in cannabis in the form of equity" if they see that debtholders, who are already above them in the capital structure, are getting preferential treatment, said the analyst. Aurora made the announcement as it posted weaker-than-expected earnings and said it was halting construction on some of its facilities to conserve cash. The stock was slightly lower in premarket trade, but has shed 38% of its value in the month to date. The ETFMG Alternative Harvest ETF MJ, +0.48% has fallen 18% in the same time frame, while the S&P 500 SPX, +1.59% has gained about 5%.