LOS ANGELES–(BUSINESS WIRE)–MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) (“MedMen” or the “Company”), a leading cannabis retailer with operations across the U.S., today announced the execution of term sheets for non-core asset sales (“Non-Core Asset Sales”), as well as the execution of definitive subscription agreements for its previously-announced equity placement (the “Equity Placement”). In total, the Non-Core Asset Sales and Equity Placement are expected to generate aggregate gross cash proceeds of approximately US$74 million.
Non-Core Asset Sales:
On November 15, 2019, the Company announced its intention to raise non-dilutive financing through the sale of certain non-core assets. As of today, the Company has executed a non-binding term sheet for the sale of its Arizona licenses, which include three vertically-integrated licenses, and a binding term sheet for the sale of a cultivation and manufacturing license in Illinois. The Company expects to generate US$54 million in aggregate gross cash proceeds through the divestiture of the non-core licenses. The completion of the sale of Arizona licenses is subject to due diligence, the execution of definitive documentation and customary regulatory approvals. The completion of the sale of the Illinois license is subject to the execution of definitive documentation and customary regulatory approvals.
The Company will continue to explore the sale of other non-core assets and will focus on deepening its retail market share in California, Nevada, Florida, Illinois, Massachusetts and New York.
On December 11, 2019, the Company announced the execution of a term sheet for its offering of Class B subordinate voting shares for aggregate gross proceeds of US$27 million at a price per share of US$0.43. Given the acceleration of the timeline for Non-Core Asset Sales, the Company modified the size of the Equity Placement from US$27 million to approximately US$20 million to limit dilution to the Company’s shareholders. As such, the Company has now signed definitive documentation for the offering of 46,962,648 Class B subordinate voting shares, at a price of US$0.43 per share. Certain of the shares to be issued pursuant to the Equity Placement will be subject to a hold period of four months from the closing date. Closing of the Equity Placement is expected to occur in one or more tranches in the coming days.
Proceeds raised from the Equity Placement are contemplated to be used to finance working capital requirements and to execute on the Company’s retail footprint expansion plans in its core geographic markets.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the United States Securities Act of 1933, as amended, and applicable state securities laws.
The terms of the Non-Core Asset Sales described in this news release are set out in term sheets, and not within definitive documentation. As a result, completion of any such transaction is subject to further terms and conditions, including representations, warranties, covenants and conditions, and other agreements being entered into by the applicable parties. The terms of such transactions are subject to change as the parties negotiate such definitive documentation. The completion of such transactions will be subject to certain conditions being satisfied, including but not limited to, the receipt of all necessary approvals, including regulatory approvals. There can be no assurance that the parties will enter into definitive documentation to complete such transactions, or that if definitive documentation is entered into, that the terms of such transactions will be as stated above or that the transactions contemplated therein will be completed.