LOS ANGELES–(Organization WIRE)–MedMen Enterprises Inc. (CSE:MMEN) (OTCQX:MMNFF) (FSE: A2JM6N) (“MedMen” or the “Firm”), is pleased to announce that it has signed a binding term sheet for a senior secured convertible credit facility of up to US$250,000,000 (the “Facility”) from funds managed by Gotham Green Partners (“GGP” or the “Investor”), an investor in the worldwide cannabis market. Management believes this is the biggest investment to date by a single investor in a publicly traded cannabis business with U.S. operations.
“The development capital will be employed to operationalize the balance of our footprint and we appear forward to developing additional alignment with GGP and their worldwide cannabis platform.”
“This strategic partnership with Gotham Green Partners represents an additional essential milestone for MedMen and stems from our extended-standing connection with The Cronos Group and GGP’s brand portfolio,” stated Adam Bierman, CEO of MedMen. “The development capital will be employed to operationalize the balance of our footprint and we appear forward to developing additional alignment with GGP and their worldwide cannabis platform.”
“We continue to be impressed with MedMen’s market major retail execution and iconic branding. With MedMen’s fortified balance sheet, the Company’s future has under no circumstances been brighter,” stated Jason Adler, managing member of GGP. “We really feel fortunate to have the chance to take such a important stake in MedMen and commence to perform actively with the management group and the board to support the Firm realize its objectives.”
The Firm intends to use the net proceeds from drawdowns on the Facility to fund the future capital requires of the organization. In addition to funding basic functioning capital, the development capital will mostly be employed to:
- Operationalize current retail licenses, with a concentrate on Florida, exactly where the Firm is licensed for 30 shops
- Integrate assets acquired by way of pending transactions, like these associated to PharmaCann, LLC
- Accelerate geographic expansion by way of bolt-on acquisitions and investments in core markets
- Help national roll-out of greater-margin in-residence branded merchandise
- Continue to invest in technologies and digital infrastructure, with a concentrate on delivery and loyalty applications
- Consolidate the provide chain and improve margins by ramping up cultivation and production capabilities
The investment from GGP will be in the kind of convertible senior secured notes issued by MM CAN USA, Inc., a subsidiary of the Firm, totaling up to US$250,000,000 (“Notes”) on a private placement basis pursuant to applicable securities laws exemptions. The Notes will be issuable in 3 tranches, with every of the second and third tranches becoming issuable at the solution of the Firm, topic to particular situations and share value thresholds becoming accomplished by MedMen. The initial tranche will be in the quantity of US$100,000,000 (“Tranche I”). The further US$150,000,000 would be funded in two US$75,000,000 tranches. The second tranche (“Tranche II”) would be offered to the Firm starting on the six-month anniversary of the closing date, and the third tranche (“Tranche III”) would be offered to the Firm starting on the six-month anniversary of the funding date of Tranche II.
All Notes will have a maturity date of 36 months from the closing date (“Maturity Date”), with a 12-month extension function offered to the Firm on particular situations, like payment of an extension charge. Notes will bear interest from their date of concern at LIBOR + six.% per annum. Through the very first 12 months, interest may possibly be paid-in-sort (“PIK”) at the Company’s solution such that any quantity of PIK interest will be added to the outstanding principal of the Notes. The Firm shall have the ideal right after the very first year, to prepay the outstanding principal quantity of the Notes prior to maturity, in complete or in element, upon payment of 105% of the principal quantity in the second year and 103% of the principal quantity thereafter.
All or a portion of the Notes (like all accrued interest thereon) will be convertible, at the solution of the holder, into class B subordinate voting shares of the Firm (the “Subordinate Voting Shares”) at any time prior to the close of organization on the final organization day promptly preceding the Maturity Date. The conversion value of every tranche of Notes is as follows:
i) for Tranche I Notes, the conversion value will be equal to 115% of the lesser of (the “Tranche I Reference Cost”) (a) US$three.10, which represents the closing value of the Subordinate Voting Shares on the Canadian Securities Exchange (the “CSE”) on the trading day promptly preceding the announcement of the Facility (translated to US dollars), and (b) the closing value of the Subordinate Voting Shares on the trading day promptly preceding the closing date and
ii) for Tranche II and Tranche III Notes, the conversion value will be equal to the lesser of (a) 115% of the 20 trading day volume weighted typical trading value of the Subordinate Voting Shares as of the trading day promptly preceding the date of concern of such tranche, and (b) US$7.00.
The Firm may possibly force the conversion of up to 75% of the then outstanding Notes at the applicable conversion value(s) if the volume weighted typical trading value of the Subordinate Voting Shares (translated to US dollars) is US$eight.00 for any 20 consecutive trading day period. If 75% of the then outstanding Notes are converted by the Firm, the term of the remaining 25% of the then outstanding Notes will be extended by 12 months.
Upon drawdown of Tranche I, the lenders would be issued share buy warrants (“Warrants”), every of which would be exercisable to buy one particular Subordinate Voting Share. The quantity of Warrants to be issued will represent an approximate 50% Warrant coverage on the Tranche 1 Notes, particular of which Warrants will have an workout value per Subordinate Voting Share that will be equal to a 30% premium to the Tranche I Reference Cost, and an additional group of which Warrants will have an workout value per Subordinate Voting Share that will be equal to a 50% premium to the Tranche I Reference Cost. The Warrant coverage on the Tranche II and Tranche III Notes will be related to these for the Tranche I Notes. The workout costs for the Warrants on the Tranche II and Tranche III Notes will be equal to the lesser of (a) a 30% or 50% (as the case may possibly be) premium to the 20 trading day volume weighted typical trading value of the Subordinate Voting Shares as of the trading day promptly preceding the date of the drawdowns of such tranches, and (b) US$7.91 or US$9.13 (as the case may possibly be).
The Warrants and any Subordinate Voting Shares issuable upon conversion of the Notes or workout of the Warrants, will be topic to a 4 month hold period from the date of issuance of the Notes or such Warrants, as applicable, in accordance with applicable Canadian securities laws.
The terms of the Facility described in this press release are these set out in a binding term sheet. Even so, completion of any tranche is topic to additional agreements becoming entered into by the parties, like as to the guarantees and/or the collateral to be supplied by MedMen and its applicable subsidiaries to safe its obligations below the Facility. The terms of the Facility, the Notes and the Warrants and the situations to drawdowns are topic to alter as the parties negotiate such definitive documentation. The closing of any tranches will be topic to particular situations becoming happy like, but not restricted to, the receipt of all essential approvals and the absence of material adverse modifications. The parties are at present anticipating a closing in April. There can be no assurance that the parties will enter into definitive documentation such that the Facility will be offered, or if definitive documentation is entered into, that the terms of the Facility, the Notes and the Warrants and the situations to getting the proceeds of any of the tranches will be as stated above.
This press release shall not constitute an give to sell or the solicitation of an give to acquire nor shall there be any sale of the securities in any jurisdiction in which such give, solicitation or sale would be unlawful. The securities becoming supplied have not been, nor will they be, registered below the United States Securities Act of 1933, as amended, and may possibly not be supplied or sold in the United States absent registration or an applicable exemption from the registration specifications of the United States Securities Act of 1933, as amended, and applicable state securities laws.
MedMen is a cannabis retailer with operations across the U.S. and flagship shops in Los Angeles, Las Vegas and New York. MedMen’s mission is to give an unparalleled knowledge that invites the planet to uncover the exceptional positive aspects of cannabis mainly because a planet exactly where cannabis is legal and regulated is a safer, healthier and happier planet. Study much more at www.medmen.com
ABOUT GOTHAM GREEN PARTNERS:
Gotham Green Partners, LLC is a New York and California-primarily based private equity firm focused on deploying capital into cannabis and cannabis-associated enterprises on a worldwide scale. The firm manages a diversified portfolio of investments and is actively investing across the cannabis worth chain.
Supply: MedMen Enterprises
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