Cannabis retailer MedMen Enterprises Inc. (CSE:MMEN) (OTCQX:MMNFF), announced that it has extended the maturity date of the term and made certain other amendments to its commercial loan agreement, of an aggregate outstanding principal balance of approximately $114.3 million, dated as of October 1, 2018, 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 documentation with respect to the conditional purchase of the term loans by a note holder 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 become due.
“MedMen will utilize this six-month grace period to realize fair value for significant assets that are no longer core to our market strategy,” Michael Serruya, the company’s CEO, said. “We have a longstanding relationship with our lenders and appreciate their support as we execute against an evolved business plan.”
Amendments To The Term Loans
The company agreed to prepay $20 million on the term loans and pay a fee of $1 million to the lenders in consideration of the amendments, which fee 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 realized net proceeds that is less than $1 million from the sale of the fee shares during a 30-day period, to the extent such fee shares are sold, reimbursed in cash.
The amendments require that the MedMen makes a mandatory prepayment in the event of the sale of certain assets. Also, covenants related to strategic actions MedMen must implement if it is unable to pay the Term Loan by the extended maturity date.
The issuance of the fee shares as part of the amendments triggered the right of holders of convertible notes under the convertible securities purchase agreement to be issued warrants in order 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 the holders of convertible notes under the convertible securities purchase agreement.
Photo: Courtesy of Sharon McCutcheon on Unsplash
