Multistate cannabis operator MedMen Enterprises said Tuesday it raised $10 million in capital by amending a senior secured debt facility led by Gotham Green Partners.
That facility and other debt amendments announced at the same time will dilute the value of MedMen stock. But the amendments also reflect an effort to dig the cash-strapped, Los Angeles-based operator out of a financial hole.
According to a news release, MedMen’s directors have unanimously “determined that the company is in serious financial difficulty, that the amendments are designed to improve the company’s financial position, and that the amendments are reasonable in the company’s circumstances.”
MedMen Chair and interim CEO Tom Lynch put a positive spin on the situation, saying in a statement, “We are excited to announce continued support from Gotham Green Partners as we continue to execute on our turnaround plan and look to grow our business.”
Under the terms of the $10 million transaction, MedMen is issuing 62.2 million stock warrants, each of which can be exercised at 16 cents per share for five years after they are issued. The stock currently is trading near that level.
MedMen showed modest improvement in growing sales and controlling expenses in its most recent quarter ended Sept. 26, 2020, but the company finished the period with a negative shareholder equity of $192.3 million.
Analysts wrote then that MedMen’s debt load was high and the “risk of further dilution remains high.”
Also, MedMen has announced management changes in the past month:
- Reece Fulgham was appointed interim chief financial officer.
- Zeeshan Hyder stepped down from the CFO position.
- Tracy McCourt was installed as chief revenue officer.
