Canopy Growth seeks bankruptcy protection for BioSteel to trim costs

A sign featuring Canopy Growth Corporation's logo is pictured at their facility in Smiths Falls

(Reuters) -Canada's Canopy Growth said on Thursday it would seek bankruptcy protection for its sports nutrition products' segment BioSteel, in the pot producer's latest attempt to rein in costs.

Canopy's shares rose 9.6% in early trade after the company said it expects to lower debt by C$95 million over the next two quarters.

The company has been grappling with liquidity issues and has taken several steps to turn profitable including job cuts, exits from some international markets, store closures and divestiture of its retail business across Canada.

Canopy first raised doubts about its ability to continue as a going concern in June and reiterated in August.

The Smiths Fall, Ontario-based company had been exploring options for a while for BioSteel, which accounted for about 60% of its fiscal first-quarter adjusted core loss.

Canopy had said in June it was facing an investigation from the U.S. Securities and Exchange Commission over the reporting of revenue from BioSteel.

The company said in a filing on Thursday it would lay off 181 employees of BioSteel and expects to take a C$15 million ($11.09 million) to C$20 million charge related to the workforce reduction.

It expects to record the charges in the second and third quarters.

($1 = 1.3522 Canadian dollars)

(Reporting by Sourasis Bose in Bengaluru; Editing by Shweta Agarwal, Shinjini Ganguli and Shilpi Majumdar)