MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) announced the execution of term sheets for non-core asset sales and the company also said that it executed the definitive subscription agreements for its previously-announced equity placement. Altogether, MedMen said it expects to generate gross cash proceeds of approximately $74 million.
MedMen took steps last month to cut costs which included laying off of 190 employees or 20% of its workforce and cutting back on store openings. In addition to those moves, the company also said it was going to sell assets.
This update on that announcement noted that 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.
MedMen said it expects to get roughly $54 million in 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 said it 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.
Voting Shares Sale Reduced
The company had originally said it was selling some of its Class B subordinate voting shares for approximately $27 million at a price per share of $0.43. However, since the sale of the licenses was moved up, the company decided to reduce the number of shares down to just $20 million. Instead, MedMen will only offer 46,962,648 Class B subordinate voting shares, at a price of $0.43 per share.
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.