MedMen Enterprises signed a binding term sheet for a senior secured convertible credit facility of up to $250 million from funds managed by Gotham Green Partners, an investor in the global cannabis industry.
MedMen management believes this is the largest investment to date by a single investor in a publicly traded cannabis company with U.S. operations.
“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.”
“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.”
MedMen intends to use the net proceeds from drawdowns on the facility to fund the future capital needs of the business and provide growth capital for:
- 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
- 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
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The investment from GGP will be in the form of convertible senior secured notes issued by MM CAN, a subsidiary of the company. The notes will be issuable in three tranches, with each of the second and third tranches being issuable at the option of the company, subject to certain conditions and share price thresholds being achieved by MedMen. The initial tranche will be in the amount of $100 million, with final two in $75 million tranches.
All notes will have a maturity date of 36 months from the closing 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.
All or a portion of the notes (including all accrued interest thereon) 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.
Upon drawdown of Tranche I, the lenders would be issued share purchase warrants, each of which would be exercisable to purchase one subordinate voting share.
MedMen is a cannabis retailer with operations across the U.S. and flagship stores in Los Angeles, Las Vegas and New York.
