Multi-state operator Acreage Holdings, Inc. (OTCQX: ACRGF) said it has entered into two definitive funding agreements to receive up to $60 million. According to a company statement, the two funding agreements are as follows:
- A Standby Equity Distribution Agreement with an institutional investor, under which the company may, at its discretion, periodically sell to Investor, and pursuant to which the Investor may, at its discretion, require the company to sell to it, up to $50 million of the Company’s Class A Subordinate Voting Shares, no par value.
- Completion of a private placement offering, in which it issued $11 million in a principal amount under a secured convertible debenture, with gross proceeds to the Company of $10,000,000 before transaction fees.
The announcement comes on the heels of Acreage saying it expects to take an $80-$100 million charge in the quarter ending March 31, 2020. In 2019, Acreage reported a net loss of $195 million, so it seems 2020 may be off to a rough start as well. Acreage is also late to file its first-quarter 2020 earnings report.
The company is also in the midst of restructuring the company as it scales back on its plans to the largest cannabis company in the country. Its first steps to scaling back properties include selling Acreage North Dakota, where it operated one medical marijuana dispensary and selling undeveloped real estate on the island of Nantucket in Massachusetts.
The company’s focus is now on key, profitable operations. Acreage believes this will lead to immediate margin improvements and accelerate its pathway to achieve positive pro-forma adjusted EBITDA for the full year 2020.
The company said in a statement that this shift is a direct response to significant changes in capital markets and in anticipation of continued historic pressure on consumer sentiment and regional and national economic uncertainties. “In addition to the sale of some non-core and other underperforming assets, Acreage intends to operate with a more optimized overhead cost structure and corporate team to adapt to an ever-changing cannabis landscape.”
The company has also laid off more than 200 employees as a result of its attempts to cut costs.