LOS ANGELES–(BUSINESS WIRE)–MedMen Enterprises Inc. (“MedMen“or the”Society”) (CSE: MMEN) (OTCQX: MMNFF), a major U.S. cannabis retailer, today announced that it has extended the maturity date for Term Loans (the “Term loans“” and made certain other changes (collectively, the “Amendments“) to its Commercial Loan Agreement, in the aggregate principal outstanding balance of approximately US$114.3 million, dated October 1, 2018 (as amended and/or otherwise modified, the “Commercial loan agreement”) entered into by its subsidiary MM CAN USA, Inc. The Amendments extend the stated maturity date of the Term Loans for a period of six months and provide that certain definitive documents relating to the conditional purchase of the Term Loans by a holder of Notes under the Company’s Senior Secured Convertible Securities Purchase Agreement dated August 17, 2021 must be entered into 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 significant assets that are no longer central to our market strategy,” said Michael Serruya, President and CEO. “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 will prepay US$20.0 million of the term loans and pay a fee of US$1.0 million to the lenders in consideration for the amendments, which fee will be paid in Class B Subordinate Voting Shares (“Shares”) at a price of US$0.12447 (C$0.15825) for a total of 8,021,593 Shares (the “cost sharing”), with any difference in net realized proceeds of less than US$1.0 million from the sale of the Fee Shares during a 30-day period, to the extent such Fee Shares are sold, redeemed cash. The Amendments require the Company to make a compulsory 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 Fee Shares under the Amendments triggered the right of convertible note holders under the Convertible Securities Purchase Agreement to issue warrants to maintain their pro rata ownership (on a partially diluted) in the Shares. A total of 6,682,567 warrants (the “Complementary Warrants”), each entitling the holder to purchase one share at a purchase price of US$0.1615 (C$0.205) will be issued to holders of convertible notes pursuant to the convertible securities purchase agreement.
In accordance with Multilateral Instrument 61-101 Protection of holders of minority securities in special transactions (“MI 61-101), the issuance of the Additional Warrants constitutes a “related party transaction” insofar as the relevant holder of convertible bonds under the Convertible Securities Purchase Agreement is an insider of the Company. The Company relies on exemptions from the formal valuation and minority approval requirements of NI 61-101, in particular: (i) the valuation requirement of NI 61-101 under the exemption contained in Section 5.5(b), as the Shares are not listed on a market specified in NI 61-101, and (ii) the minority shareholder approval requirement of NI 61-101 under the exemption contained in section 5.7(1)(a) of NI 61-101, as the fair market value of the supplemental warrants issued does not exceed 25% of the market capitalization of the Company (as determined under Regulation 61-101). A material change report is not expected to be filed by the Company 21 days prior to the issuance of the Supplemental Warrants as the details of the amendments were not agreed until February 1, 2022. In the Company’s view, this was reasonable under the circumstances since the term loans were to mature on January 31, 2022.
MedMen is a leading US cannabis retailer with an operational footprint in California, Nevada, Illinois, Arizona, Massachusetts and Florida. MedMen offers a robust selection of high-quality products, including MedMen-owned MedMen Red and LuxLyte brands, through its premium retail stores, exclusive delivery service, as well as curbside pickup. and in store. MedMen Buds, an industry-first loyalty program, provides exclusive access to promotions, product discounts and content. MedMen believes that a world where cannabis is legal and regulated is safer, healthier and happier. Learn more about MedMen at www.medmen.com.
Caution Regarding Forward-Looking Statements
Certain statements in this press release constitute “forward-looking statements” within the meaning of federal securities laws, including the Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of Canadian securities laws (each being referred to as “-forward-looking statements”). Forward-looking statements are predictions based on expectations and projections about future events and are not statements of historical fact. You can identify forward-looking statements by using forward-looking terms such as ” plan”, “continue”, “expect”, “anticipate”, “intend”, “predict”, “believe”, “project”, “estimate”, “probable”, “believe”, “could”, “seek”, “may”, “shall”, “stay”, “potential”, “may”, “should”, “could”, “future”, “is positioned” and similar expressions, or the negative of these expressions, or words or similar expressions that predict or indicate future events or trends and do not relate solely to historical matters. You may also identify forward-looking statements when discussing MedMen’s strategic initiatives, including productivity and synergy initiatives, asset sales, our future performance and results of operations.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements of MedMen, or industry results, to be materially different from future results, levels of activity, performance or results. achievements expressed or implied by these forward-looking statements, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or inaccurate and may not be able to be realized. We do not guarantee that the transactions and events described will occur as described (or that they will occur at all). Forward-looking statements include statements regarding current intentions, beliefs, projections, prospects, analyzes or expectations for the MedMen business. Certain material factors, estimates, objectives, projections or assumptions have been used in drawing the conclusions contained in the forward-looking statements throughout this communication. Many factors could cause actual results, performance or achievements to differ materially from any forward-looking statements, and other risks and uncertainties currently unknown to MedMen, as the case may be, or which MedMen believes are immaterial, could also cause difference between actual results or events. substantially from those expressed in the forward-looking statements contained herein. The forward-looking statements included in this communication are made as of the date of this communication, and MedMen undertakes no obligation to publicly update these forward-looking statements to reflect new information, subsequent events or otherwise, except as required by securities laws. applicable so require.
A variety of factors, including known and unknown risks, many of which are beyond MedMen’s control, could cause actual results to differ materially from the forward-looking statements contained in this press release and other reports filed or provided to the DRY. and other regulatory bodies by MedMen and made by directors, officers, other employees and others authorized to speak on behalf of MedMen. These factors include, but are not limited to: (i) management’s perceptions of historical trends, current conditions and expected future developments; (ii) the ability to effectively manage growth, including planned and unplanned costs; (iii) achieve the expected results of MedMen’s strategic plans; (iv) the adequacy of the Company’s capital resources and liquidity, including, but not limited to, the availability of sufficient cash flows to successfully execute its growth strategies (either on schedule or not at all) ; (v) the ability to raise the necessary or desired funds to achieve its strategic business plans; (vi) obtaining and maintaining all required licenses, approvals and permits; (vii) favorable production levels and sustainable costs; (viii) inputs, suppliers and skilled labor are not available or are only available at uneconomic costs; (ix) future adverse legislative and regulatory developments regarding medical and recreational marijuana; (x) consumer interest in the Company’s respective products and other branded products that MedMen may offer in its stores; (xi) competition; (xii) governmental regulation of the Company’s activities and products, including, but not limited to, the areas of taxation and environmental protection; (xiii) risks of operating or investing in the United States marijuana industry; (xiv) the outcome of any claim, litigation and proceeding to which the Company is a party, including any dispute settlement or any pending regulatory or governmental investigation or action or any other legal contingency; (xv) the Company’s ability to conduct its business safely, efficiently and effectively; (xvi) changes in the general economic, business and political conditions in which the Company operates, including changes in financial markets; (xvii) changes in applicable laws generally; and (xviii) and other risk factors discussed in MedMen’s Annual Report on Form 10-K, and other continuous disclosure documents, all available at www. sec.gov or www.sedar.com.