MedMen Announces Termination of Merger Agreement With PharmaCann and Management Adjustments

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  • MedMen and PharmaCann terminate organization mixture agreement
  • In conjunction with the termination, MedMen will be compensated with retail and cultivation assets in Illinois and Virginia
  • Termination opens up MedMen’s balance sheet to deepen presence in core retail markets of California, Illinois, Nevada, Florida, New York and Massachusetts and invest additional in its omni-channel platform
  • Appoints Zeeshan Hyder as Chief Monetary Officer, powerful promptly

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October 08, 2019 06:00 AM Eastern Daylight Time

LOS ANGELES&#8211(Company WIRE)&#8211MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) (“MedMen” or the “Organization”), a top cannabis retailer with operations across the U.S., these days announced the mutual agreement to terminate the Company Mixture Agreement dated December 23, 2018, pursuant to which MedMen was to obtain PharmaCann, LLC (“PharmaCann”) in an all-stock transaction (“Transaction”). In light of marketplace developments more than the previous 12 months and the continued evolution of its organization technique, MedMen and its Board have determined that focusing on leveraging the Company’s retail brand, its leadership position in California, and its digital platform to develop the organization will produce higher shareholder worth than the completion of the Transaction. In connection with the termination, PharmaCann has agreed to transfer particular cannabis licenses and associated assets in Illinois and Virginia to MedMen for no more consideration from MedMen, other than the forgiveness of particular debt, as additional described under.

“Looking at the PharmaCann portfolio these days, Illinois has emerged as the most desirable chance for our longer-term, strategic development strategy. The addition of these assets, without the need of dilution, is a win for MedMen and our shareholders.”

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“The cannabis sector has evolved tremendously considering the fact that we initially announced the PharmaCann transaction and primarily based on the present macro-atmosphere and future possibilities that exist for our organization, we think it is now in the very best interest of our shareholders to deepen, rather than widen, our Company’s attain,” mentioned Adam Bierman, MedMen co-founder and chief executive officer. “Looking at the PharmaCann portfolio these days, Illinois has emerged as the most desirable chance for our longer-term, strategic development strategy. The addition of these assets, without the need of dilution, is a win for MedMen and our shareholders.”

On December 24, 2018, MedMen announced that it had entered into the definitive agreement to obtain PharmaCann, in which PharmaCann unitholders have been anticipated to obtain around 168.four million shares in the combined business, primarily based on MedMen’s totally diluted shares outstanding as of June 29, 2019. Due to the fact the announcement, numerous business developments have considerably impacted the accretive nature of the Transaction, which includes the following:

  • The capital markets, each for the U.S. and Canadian cannabis industries, have shifted considering the fact that March 2019, with the HMMJ index down 47%1 during that time period. The underperformance has produced it increasingly much more important to allocate capital effectively provided the present business headwinds. Even though PharmaCann holds numerous licenses across the U.S., a massive portion of its assets, specifically associated to cultivation and manufacturing in healthcare markets, demand substantial capital expenditures.
  • More than the previous six months, MedMen has decided to increasingly concentrate on California, exactly where there remains substantial upside for cannabis operators. Around 76%two of California cities continue to ban recreational cannabis. A number of jurisdictions inside the state not too long ago announced the commencement of recreational sales, and the Organization has been actively applying for, acquiring and creating out retail areas across the state, exactly where it is licensed for 17 retailers. MedMen plans to have 30 retailers in the state by the finish of calendar year 2020. Provided the worth MedMen has made in California, the Organization does not think entry into non-core markets is worth the degree of shareholder dilution needed by the Transaction.
  • The closing timeline for the Transaction was considerably impacted provided regulatory hurdles at the federal and state level, which delayed the integration and realization of synergies that have been initially factored into the worth of the Transaction to the Organization.
  • In addition to expanding its retail footprint, MedMen believes allocating capital and sources towards enhancing its omni-channel providing in its core markets, by way of its delivery and loyalty platforms, will produce much more extended-term shareholder worth than getting into new healthcare markets, such as Pennsylvania, Ohio and Maryland, exactly where the Organization does not presently have operating leverage.

As aspect of the agreement to terminate, PharmaCann has agreed to spend a termination charge to MedMen by way of a transfer of the membership interests (“Transfer of Interests”) in 3 entities holding the following 4 assets:

  • Operational cultivation and production facility in Hillcrest, Illinois
  • Retail place in Evanston, Illinois
  • Retail license for Higher Chicago, Illinois
  • License for vertically integrated facility in Virginia

On a pro forma basis, MedMen will have licenses for 4 retail areas in Higher Chicago, which includes its current place in Oak Park, Illinois. The Organization will also hold 1 of only 21three cultivation and production licenses in the state, which will enable MedMen to vertically integrate and have complete manage of its provide chain when recreational sales commence in January 2020. As aspect of the agreement to terminate and contingent on the effective Transfer of Interests, MedMen will forgive all amounts outstanding beneath its current line of credit to PharmaCann (the “Line of Credit”), which totaled around US$21 million, which includes accrued interest, as of September 30, 2019. In the occasion any Transfer of Interest is unable to take place due to a final adjudication or denial by the applicable regulatory physique governing such license (a “Rejected Transfer”), PharmaCann will spend MedMen an quantity equal to (i) 1-third (1/three) of the aggregate principal quantity and any corresponding accrued interest thereon owed beneath the Line of Credit (such interest to be calculated as if no loan forgiveness of any portion of the Line of Credit occurred), and (ii) US$10 million (such amounts are collectively referred to as the “Rejected Transfer Fee”) for every single denial. Any such Rejected Transfer Charge shall be paid inside 5 days of the associated Rejected Transfer, or, PharmaCann may perhaps elect to finance the Rejected Transfer Charge, supplied that the financed Rejected Transfer Charge shall accrue interest at a price of seven and 1-half % (7.five%) per annum and be due and payable on the initially anniversary of the date of the Rejected Transfer.

In addition, powerful these days, Zeeshan Hyder has been appointed Chief Monetary Officer at MedMen. Mr. Hyder, presently MedMen&#8217s Chief Corporate Improvement Officer, has been an integral aspect of the leadership group at MedMen considering the fact that 2017, overseeing corporate improvement, investor relations and other economic development initiatives. His understanding of the company’s strategic strategy and deep expertise of the cannabis business deliver an superb foundation for continued fiscal achievement. To date, Mr. Hyder has led more than $300M in M&ampA offers executed, partnered with the CEO to take the business public and raised $500M in capital for direct investment into the organization.

Mr. Hyder, alongside MedMen’s CEO and Board, has observed the organization by way of an vital chapter and will be instrumental in spearheading the business&#8217s path towards profitability. MedMen is targeting break even EBITDA by the finish of calendar 2020 and will deliver additional particulars on the October 28th earnings get in touch with.

Hyder succeeds Michael Kramer, whose employment has been terminated as of October 7, 2019. Mr. Kramer will concentrate on a seamless transition and as such has signed a consulting agreement for the remainder of the calendar year.

1 Source: Bloomberg represents time period amongst March 19, 2019 and September 30, 2019
two Source: https://www.latimes.com/california/story/2019-08-14/californias-largest-legal-marijuana-marketplace
three Source: https://www2.illinois.gov/websites/agr/Plants/MCPP/Pages/default.aspx

About MedMen:

Founded in 2010, MedMen is North America’s premium cannabis retailer. Founders Adam Bierman and Andrew Modlin have defined the subsequent generation discovery platform for cannabis and all its added benefits. A robust choice of higher-excellent goods, which includes MedMen-owned brands [statemade], LuxLyte and MedMen Red, coupled with a group of cannabis-educated associates cement the Company’s commitment to giving an unparalleled expertise. MedMen’s business-top technologies enables a totally compliant, owned-and-operated delivery service and MedMen Buds, a nationwide loyalty system.

MedMen believes that a planet exactly where cannabis is legal and regulated is safer, healthier and happier. Discover much more at www.MedMen.com.

Supply: MedMen Enterprises

Cautionary Note Relating to Forward-Searching Details and Statements:

This press release includes particular “forward-seeking information” inside the which means of applicable Canadian securities legislation and may perhaps also include statements that may perhaps constitute “forward-seeking statements” inside the which means of the secure harbor provisions of the United States Private Securities Litigation Reform Act of 1995, 15 U.S.C.A. Sections 77z-two and 78u-five (Supp. 1996). Such forward-seeking data and forward-seeking statements are not representative of historical details or data or present situation, but as an alternative represent only MedMen’s beliefs relating to future events, plans or objectives, quite a few of which, by their nature, are inherently uncertain and outdoors of MedMen’s manage. Frequently, such forward-seeking data or forward-seeking statements can be identified by the use of forward-seeking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may perhaps include statements that particular actions, events or final results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-seeking data and forward-seeking statements contained herein may perhaps include things like, but are not restricted to, the anticipated added benefits from terminating the Transaction, expectations relating to the Transfer of Interests, which includes the potential to full such asset transfers, expectations relating to the receipt from PharmaCann of Rejected Transfer Charges in the occasion of any Rejected Transfer, expectations relating to the quantity of areas to be operating in California by the finish of calendar year 2020, and expectations for other financial, organization, and/or competitive elements.

By identifying such data and statements in this manner, MedMen is alerting the reader that such data and statements are topic to recognized and unknown dangers, uncertainties and other elements that may perhaps result in the actual final results, level of activity, overall performance or achievements of MedMen to be materially distinct from these expressed or implied by such data and statements. In addition, in connection with the forward-seeking data and forward-seeking statements contained in this press release, MedMen has produced particular assumptions. Amongst the important elements that could result in actual final results to differ materially from these projected in the forward-seeking data and statements are the following: inability to obtain the requisite regulatory approvals for the Transfer of Interests, inability of PharmaCann to spend any Rejected Transfer Charges that may perhaps arise as a outcome of 1 or much more Rejected Transfers, adjustments in common financial, organization and political situations, which includes adjustments in the economic markets adjustments in applicable laws and compliance with substantial government regulation. Really should 1 or much more of these dangers, uncertainties or other elements materialize, or must assumptions underlying the forward-seeking data or statements prove incorrect, actual final results may perhaps differ materially from these described herein as intended, planned, anticipated, believed, estimated or anticipated.

While MedMen believes that the assumptions and elements employed in preparing, and the expectations contained in, the forward-seeking data and statements are affordable, undue reliance must not be placed on such data and statements, and no assurance or assure can be provided that such forward-seeking data and statements will prove to be precise, as actual final results and future events could differ materially from these anticipated in such data and statements. The forward-seeking data and forward-seeking statements contained in this press release are produced as of the date of this press release, and MedMen does not undertake to update any forward-seeking data and/or forward-seeking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-seeking data and statements attributable to MedMen or persons acting on its behalf is expressly certified in its entirety by this notice.

The post MedMen Announces Termination of Merger Agreement With PharmaCann and Management Adjustments appeared initially on L.A. Cannabis News.

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