US cannabis retail giant MedMen Enterprises Inc. has signed a binding term sheet for a senior secured convertible credit facility of up to US$250,000,000.
The facility is drawn from funds managed by Gotham Green Partners, a New York and California-based private equity firm which manages a portfolio including investments in Cronos Group, Flow Kana and Plus Products.
MedMen’s management believes the deal represents 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.”
“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.”
Adam Bierman, MedMen (pictured)
Jason Adler, managing member of GGP, said: “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.
“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 posted $51m in net revenue in the last six months of calendar 2018, alongside an operating loss of $125.1m.
MedMen says it intends to use the net proceeds from drawdowns on the $250m facility to ‘fund the future capital needs of the business’.
In addition to funding general working capital, the growth capital will primarily be used to:
- 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
The investment from GGP will be in the form of convertible senior secured notes issued by MM CAN USA, Inc., a subsidiary of the MedMen totaling up to US$250,000,000 on a private placement basis.
The notes will be issuable in three tranches, with each of the second and third tranches subject to certain conditions and share price thresholds being achieved by MedMen.
The initial tranche will be in the amount of US$100,000,000.
The additional US$150,000,000 would be funded in two US$75,000,000 tranches. The second tranche would be available to MedMen beginning on the six-month anniversary of the closing date, and the third tranche would be available to the Company beginning on the six-month anniversary of the funding date of Tranche II.
All or a portion of the notes will be convertible, at the option of the holder, into class B subordinate voting shares of MedMen at any time prior to an agreed Maturity Date.Cannabis Business Worldwide