Gotham Green Archives - Green Market Report

Debra BorchardtDebra BorchardtOctober 29, 2019
Medmen.jpg

5min11570

Following its earnings announcement on Monday after the close, MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) said that it was making certain amendments to its $250 million senior secured convertible credit facility arranged by Gotham Green Partners including changes to the company’s board. MedMen said it has agreed to form a committee to select new independent directors to be appointed or elected to the board, which directors would form a majority of the board. MedMen said it will propose director candidates to this committee for consideration and approval.

Changes To The Terms

MedMen said that the aggregate amount that remains available to be borrowed has not changed, but “In order to minimize dilution given the current capital market environment, both parties have agreed to amend the size of both Tranche 3 and Tranche 4, as well as the timing of Tranche 3. Tranche 3 now consists of $10 million in available credit and Tranche 4 consists of $115 million in available credit. The parties anticipate that Tranche 3 will be funded within 30 days instead of the originally proposed date in December 2019.”

The larger Tranch 4 will require the consent of both MedMen and Gotham Green under the Facility. Some of the reporting and financial covenants under the Facility have also been modified to provide MedMen with additional balance sheet flexibility. Changes in the covenants included a reduction in required minimum cash balances, removal of restrictions on equity issuances and an additional ability to spin-out or borrow against certain non-core assets, in addition to sales and indebtedness that were permitted prior to the amendment.

MedMen’s Deals With Gotham Green

March

In March of this year, MedMen signed a binding term sheet for a senior secured convertible credit facility of up to $250 million from funds managed by cannabis investor Gotham Green Partners.  MedMen said at the time that it thought this was the largest investment to date by a single investor in a publicly-traded cannabis company with U.S. operations. At that time, the stock was trading over C$4  on the CSE and $3 plus change on the OTC.

July

Then in July, MedMen went back to Gotham Green with participation from Wicklow Capital, agreed to an additional $30 million in an equity commitment to MedMen, bringing the total financing commitment to $280 million. To date, Gotham Green Partners had funded $100 million of the total commitment.

The terms were amended to reflect the drop in the company’s share price.  “Pursuant to Tranche 1 of the Facility will be changed from $3.29 to $2.55, which represents a 12% premium over the Company’s 20 trading day VWAP as of July 8, 2019.” In addition, Gotham Green Partners and Wicklow Capital have committed to a $30 million non-brokered financing of Subordinate Voting Shares at a price equal to $2.37 per share. The Equity Placement is conditional upon the satisfaction of customary conditions, including but not limited to the receipt of all necessary approvals. MedMen shares in July were trading at approximately $2.53.

August

One month later, the deal was amended again. In August, MedMen said that the conversion price was lowered to $2.55 for the first Tranche. The second Tranche conversion price was dropped to $2.17. The second Tranche was expected to be for $75 million and that has dropped to $50 million. “The gross proceeds from the Equity Placement together with the remaining financing commitment under the Facility total US$155 million.”

So, in August it was no longer a $250 million investment, but now it is back to being characterized as a $250 million investment.


Debra BorchardtDebra BorchardtSeptember 30, 2019
shutterstock_256424509-1280x853.jpg

5min2280

Gotham Green Partners has invested an additional $20 million in iAnthus Capital Holdings, Inc. (CSE: IAN)(OTCQX: ITHUF) through the purchase of senior secured convertible notes. Green Gotham said it was part of a broader $100 million financing plan to support the buildout of all existing markets in which iAnthus currently operates.

iAnthus has been building its market share at a rapid pace. Over the past 16 months, Chief Operating Officer Pat Tiernan said in a statement that the company currently has 27 open dispensaries, 11 of which have opened in the last ten months and the company is aggressively working to open another 12 in the next six months. Tiernan added, “We are growing in each of our markets and are one of the only MSOs that has meaningful revenue in multiple states, including ArizonaColoradoFloridaMarylandMassachusetts and Nevada, with strong same-store sales growth across our footprint.”

“We are pleased to be working with a leading financial investor in the U.S. cannabis sector. The new notes will allow us to build out operations in our key markets and continue to develop our retail and product brands,” said Hadley Ford, CEO of iAnthus.   “We believe this level of support from GGP will fully fund the development of our existing assets and provide the necessary capital for iAnthus to achieve positive and sustainable EBITDA and operational free cash flow in 2020.”

Terms

The notes have an annual coupon of 13%, payable quarterly, which will mature on May 14, 2021, subject to the iAnthus’ right to extend the maturity date by twelve months, and are exchangeable into common shares of the company at a conversion price of $1.89, which represents a 25% premium to the closing price of the common shares on Friday, September 27, 2019. The notes are being issued with $10 million of attached three-year warrants with an exercise price of $1.97.  Any additional notes will have substantially the same terms, including conversion price and warrant coverage, subject to compliance with the policies of the CSE. The note purchase agreement provides GGP the right to purchase additional notes of up to $66.5 million for a total of $86.5 million. The company may obtain an additional $13.5 million from potential financing sources, including GGP or others, to fulfill its $100.0 million plan, with any such additional financing subject to the negotiation of pricing, terms, and conditions in the context of the market.

“We have viewed iAnthus as a key partner since our initial investment in May 2018 and have closely watched the Company’s evolution as it has continued to execute on its operational strategy across multiple markets. The Company has made significant strides in broadening and operationalizing its footprint, which we do not believe is reflected in the Company’s current trading price,” said Jason Adler, Managing Member of Gotham Green Partners. “We look forward to working alongside iAnthus and continuing to support the growth of the Company.”

 


William SumnerWilliam SumnerJuly 10, 2019
daily_hit004-1280x533.png

4min4460

It’s time for your Daily Hit of cannabis financial news for July 10, 2019.

On the Site

Canaccord Genuity Increases Its Long-Term Growth Outlook for U.S. Cannabis

Analysts with Canaccord Genuity (CG) have increased their 2019 to 2022 long-term growth outlook for the U.S. cannabis industry from 19% CAGR to 20%. According to the report, the modest increase was attributed primarily to increased expectations for Illinois’ adult-use market, as well as recent positive trends in the Nevada and Massachusetts market.

Gotham Green

Gotham Green Partners, with participation from Wicklow Capital, has agreed to an additional $30 million in an equity commitment to MedMen Enterprises Inc. (CSE:MMEN) (OTCQX:MMNFF), bringing the total financing commitment to $280 million. To date, Gotham Green Partners has funded $100 million of the total commitment.

KushCo

KushCo Holdings, Inc. (OTCQX: KSHB) announced its financial results for the third quarter ending on May 31, 2019, after the market closed on Tuesday. Net revenue was $41.5 million, representing a quarter-over-quarter increase of 17.9%.On a GAAP basis, gross profit was 17.8%. On a GAAP basis, the net loss was $10.6 million, up from $9.2 million in the same period of the previous year.

Extractors Celebrate Their 710 Holiday – Dab Day

Extractors get their own holiday every year. July 10, also known as 7/10 has been fondly named “Dab Day” within the cannabis community. Spelling “OIL” when flipped upside-down, 7/10 is the day when cannabis concentrates and extracts are celebrated, and sales data is showing that cannabis consumers are eagerly participating in the celebration.

In Other News

GrowGeneration Corp.

GrowGeneration Corp. (OTCQX: GRWG) announced today that former Home Depot CEO, Bob Nardelli, will join the company as a strategic advisor, providing advice to the company’s CEO and Board of Directors on matters related to supply chain, merchandise, branding, distribution, new product introductions, pricing and channel selection. “Bob is a globally recognized business visionary.  He comes with a strong track record of executive operations to generate accelerated, profitable growth and shareholder value across many industry verticals that are of great interest to us,” said GrowGeneration CEO Darren Lampert.

Veritas Pharma

Veritas Pharma Inc. (CSE: VRT) (OTC: VRTHF) (Frankfurt: 2VP) announced that it has sold its 50% interest in 3 Carbon Extractions to Yari Nieken for $375,000. According to interim CEO Peter McFadden, the sale of its interest is part of the company’s wider restructuring efforts. “The sale of our interest in 3 Carbon was taken as part of the restructuring of the Company with aims to consolidate and focus the Company through assets that directly contribute to the advancement of our mission. Currently neither our research nor our operations aligned with our interest in 3 Carbon,” McFadden said.


Debra BorchardtDebra BorchardtMarch 22, 2019
Medmen.jpg

6min11500

MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF)  has signed a binding term sheet for a senior secured convertible credit facility of up to $250 million from funds managed by cannabis investor Gotham Green Partners.  MedMen said that it thinks this is the largest investment to date by a single investor in a publicly traded cannabis company with U.S. operations.

The investment from GGP will be in the form of convertible senior secured notes issued by MM CAN USA, Inc., a subsidiary of the company, totaling up to $250 million on a private placement. MedMen will receive the investment in three tranches assuming the company achieves certain price thresholds and other conditions. The first tranche is for $100 million, with the second tranche of $150 million delivered in two chunks of $75 million. That second investment will be made available at the six-month mark of the closing date and the third six months following the second.

“This strategic partnership with Gotham Green Partners represents another key milestone for MedMen and stems from our long-standing relationship with The Cronos Group and GGP’s brand portfolio,” said Adam Bierman, CEO of MedMen. “The growth capital will be used to operationalize the balance of our footprint and we look forward to creating further alignment with GGP and their global cannabis platform.”

The company said it plans to use the money from drawdowns on the facility for the following purposes:

  • Operationalize existing retail licenses, with a focus on Florida, where the Company is licensed for 30 stores
  • Integrate assets acquired through pending transactions, including those related to PharmaCann, LLC
  • Accelerate geographic expansion through bolt-on acquisitions and investments in core markets
  • Support national roll-out of higher-margin in-house branded products
  • Continue to invest in technology and digital infrastructure, with a focus on delivery and loyalty programs
  • Consolidate the supply chain and enhance margins by ramping up cultivation and production capabilities

“We continue to be impressed with MedMen’s industry-leading retail execution and iconic branding. With MedMen’s fortified balance sheet, the Company’s future has never been brighter,” said Jason Adler, managing member of GGP. “We feel fortunate to have the opportunity to take such a significant stake in MedMen and begin to work actively with the management team and the board to help the Company achieve its goals.”

Payback

The statement outlined how MedMen will pay back the investment:

All Notes will have a maturity date of 36 months from the closing date (“Maturity Date”), with a 12-month extension feature available to the Company on certain conditions, including payment of an extension fee. Notes will bear interest from their date of issue at LIBOR + 6.0% per annum. During the first 12 months, interest may be paid-in-kind at the company’s option such that any amount of PIK interest will be added to the outstanding principal of the Notes. The Company shall have the right after the first year, to prepay the outstanding principal amount of the Notes prior to maturity, in whole or in part, upon payment of 105% of the principal amount in the second year and 103% of the principal amount thereafter.

All or a portion of the Notes will be convertible, at the option of the holder, into class B subordinate voting shares of the company at any time prior to the close of business on the last business day immediately preceding the Maturity Date. The conversion price of each tranche of Notes is as follows:

i) for Tranche I Notes, the conversion price will be equal to 115% of the lesser of  (a) US$3.10, which represents the closing price of the Subordinate Voting Shares on the Canadian Securities Exchange on the trading day immediately preceding the announcement of the Facility, and (b) the closing price of the Subordinate Voting Shares on the trading day immediately preceding the closing date; and

ii) for Tranche II and Tranche III Notes, the conversion price will be equal to the lesser of (a) 115% of the 20 trading day volume weighted average trading price of the Subordinate Voting Shares as of the trading day immediately preceding the date of issue of such tranche, and (b) US$7.00.

The company may force the conversion of up to 75% of the then outstanding Notes at the applicable conversion price(s) if the volume weighted average trading price of the Subordinate Voting Shares (translated to US dollars) is US$8.00 for any 20 consecutive trading day period. If 75% of the then outstanding Notes are converted by the company, the term of the remaining 25% of the then outstanding Notes will be extended by 12 months.



About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


READ MORE



Recent Tweets

@GreenMarketRpt – 8 hours

Our biggest fans this week: CannaWrite, DendeCannabist, EJBGlobal. Thank you! via

@GreenMarketRpt – 9 hours

The Green Market Report’s Marijuana Money November 15, 2019

@GreenMarketRpt – 14 hours

My week on Twitter 🎉: 9 Mentions, 18.1K Mention Reach, 10 Likes, 6 Retweets, 16.8K Retweet Reach. See yours with…

Back to Top

You have Successfully Subscribed!