Cannabis retailer MedMen Enterprises Inc. MMEN MMNFFannounced to have extended the due date of the term and made certain other amendments to its commercial loan agreementan aggregate principal outstanding balance of approximately $114.3 million, dated October 1, 2018, entered into by its subsidiary MM CAN USA, Inc.
Amendments extend the stated maturity date of term loans for a period of six months and provide that certain final documents relating to the conditional purchase of the Term Loans by a Noteholder under the Company’s Senior Secured Convertible Securities Purchase Agreement dated August 17, 2021 must be entered within 45 days or the stated maturity date of the Term Loans becomes due.
“MedMen will use this six-month grace period to realize the fair value of material assets that are no longer central to our market strategy,” Company CEO Michael Serruya, mentioned. “We have a long-standing relationship with our lenders and appreciate their support as we execute an evolved business plan.”
Changes to Term Loans
The company agreed to prepay $20 million on the term loans and pay a fee of $1 million to the lenders for the amendments, whose expenses will be paid in Class B Subordinate Voting Shares at a price of $0.12447, for a total of 8,021,593 shares, with any difference in the net proceeds realized less than $1 million from the sale of the shares fee over a 30-day period, to the extent such fee shares are sold, redeemed in cash.
Amendments require the MedMen to make a mandatory prepayment in the event of the sale of certain assets. In addition, commitments related to strategic actions that MedMen must implement if it is unable to repay the term loan on the extended due date.
The issuance of the fee shares as part of the amendments triggered the right of convertible note holders under the convertible securities purchase agreement to issue warrants to maintain their pro rata ownership interest in the shares.
A total of 6,682,567 warrants, each entitling the holder to purchase one share at a purchase price of $0.1615, will be issued to holders of convertible notes pursuant to the convertible securities purchase agreement.