GHP Library

MedMen Announces US$250 Million Investment From Gotham Green Partners

LOS ANGELES–(BUSINESS WIRE)–MedMen Enterprises Inc. (CSE:MMEN) (OTCQX:MMNFF) (FSE: A2JM6N) (“MedMen” or the “Company”), is pleased to announce that it has signed a binding term sheet for a senior secured convertible credit facility of up to US$250,000,000 (the “Facility”) from funds managed by Gotham Green Partners (“GGP” or the “Investor”), an investor in the global cannabis industry. Management believes this is 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.”

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.

Jason Adler, managing member of GGP

The Company intends to use the net proceeds from drawdowns on the 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 Company, totaling up to US$250,000,000 (“Notes”) on a private placement basis pursuant to applicable securities laws exemptions. The Notes will be issuable in three tranches, with each of the second and third tranches being issuable at the option of the Company, 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 (“Tranche I”). The additional US$150,000,000 would be funded in two US$75,000,000 tranches. The second tranche (“Tranche II”) would be available to the Company beginning on the six-month anniversary of the closing date, and the third tranche (“Tranche III”) would be available to the Company beginning on the six-month anniversary of the funding date of Tranche II.

All Notes will have a maturity date of 36 months from the closing date (“Maturity Date”), with a 12-month extension feature available to the Company on certain conditions, including payment of an extension fee. Notes will bear interest from their date of issue at LIBOR + 6.0% per annum. During the first 12 months, interest may be paid-in-kind (“PIK”) at the Company’s option such that any amount of PIK interest will be added to the outstanding principal of the Notes. The Company shall have the right after the first year, to prepay the outstanding principal amount of the Notes prior to maturity, in whole or in part, upon payment of 105% of the principal amount in the second year and 103% of the principal amount thereafter.

All or a portion of the Notes (including all accrued interest thereon) will be convertible, at the option of the holder, into class B subordinate voting shares of the Company (the “Subordinate Voting Shares”) at any time prior to the close of business on the last business day immediately preceding the Maturity Date. The conversion price of each tranche of Notes is as follows:

i) for Tranche I Notes, the conversion price will be equal to 115% of the lesser of (the “Tranche I Reference Price”) (a) US$3.10, which represents the closing price of the Subordinate Voting Shares on the Canadian Securities Exchange (the “CSE”) on the trading day immediately preceding the announcement of the Facility (translated to US dollars), and (b) the closing price of the Subordinate Voting Shares on the trading day immediately preceding the closing date; and

ii) for Tranche II and Tranche III Notes, the conversion price will be equal to the lesser of (a) 115% of the 20 trading day volume weighted average trading price of the Subordinate Voting Shares as of the trading day immediately preceding the date of issue of such tranche, and (b) US$7.00.

The Company may force the conversion of up to 75% of the then outstanding Notes at the applicable conversion price(s) if the volume weighted average trading price of the Subordinate Voting Shares (translated to US dollars) is US$8.00 for any 20 consecutive trading day period. If 75% of the then outstanding Notes are converted by the Company, the term of the remaining 25% of the then outstanding Notes will be extended by 12 months.

Upon drawdown of Tranche I, the lenders would be issued share purchase warrants (“Warrants”), each of which would be exercisable to purchase one Subordinate Voting Share. The number of Warrants to be issued will represent an approximate 50% Warrant coverage on the Tranche 1 Notes, certain of which Warrants will have an exercise price per Subordinate Voting Share that will be equal to a 30% premium to the Tranche I Reference Price, and another group of which Warrants will have an exercise price per Subordinate Voting Share that will be equal to a 50% premium to the Tranche I Reference Price. The Warrant coverage on the Tranche II and Tranche III Notes will be similar to those for the Tranche I Notes. The exercise prices for the Warrants on the Tranche II and Tranche III Notes will be equal to the lesser of (a) a 30% or 50% (as the case may be) premium to the 20 trading day volume weighted average trading price of the Subordinate Voting Shares as of the trading day immediately preceding the date of the drawdowns of such tranches, and (b) US$7.91 or US$9.13 (as the case may be).

The Warrants and any Subordinate Voting Shares issuable upon conversion of the Notes or exercise of the Warrants, will be subject to a four month hold period from the date of issuance of the Notes or such Warrants, as applicable, in accordance with applicable Canadian securities laws.

The terms of the Facility described in this press release are those set out in a binding term sheet. However, completion of any tranche is subject to further agreements being entered into by the parties, including as to the guarantees and/or the collateral to be provided by MedMen and its applicable subsidiaries to secure its obligations under the Facility. The terms of the Facility, the Notes and the Warrants and the conditions to drawdowns are subject to change as the parties negotiate such definitive documentation. The closing of any tranches will be subject to certain conditions being satisfied including, but not limited to, the receipt of all necessary approvals and the absence of material adverse changes. The parties are currently anticipating a closing in April. There can be no assurance that the parties will enter into definitive documentation such that the Facility will be available, or if definitive documentation is entered into, that the terms of the Facility, the Notes and the Warrants and the conditions to receiving the proceeds of any of the tranches will be as stated above.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the United States Securities Act of 1933, as amended, and applicable state securities laws.

ABOUT MEDMEN:

MedMen is a cannabis retailer with operations across the U.S. and flagship stores in Los Angeles, Las Vegas and New York. MedMen’s mission is to provide an unparalleled experience that invites the world to discover the remarkable benefits of cannabis because a world where cannabis is legal and regulated is a safer, healthier and happier world. Learn more at www.medmen.com

ABOUT GOTHAM GREEN PARTNERS:

Gotham Green Partners, LLC is a New York and California-based private equity firm focused on deploying capital into cannabis and cannabis-related enterprises on a global scale. The firm manages a diversified portfolio of investments and is actively investing across the cannabis value chain.