GHP Library

MedMen Announces Increased Commitment From Gotham Green Partners

• Gotham Green Partners, with Participation from Wicklow Capital, Commits to Additional US$30,000,000 Equity Commitment, Bringing Total Commitment to US$280,000,000
• Amendments to Previously-Announced Facility to Provide Greater Flexibility

LOS ANGELES, July 10, 2019–(BUSINESS WIRE)–MedMen Enterprises Inc. (CSE:MMEN) (OTCQX:MMNFF) (“MedMen” or the “Company”) is pleased to announce that it has signed a binding term sheet in respect of certain amendments to the definitive agreements for the up to US$250,000,000 senior secured convertible credit facility (the “Facility”) led by Gotham Green Partners, an investor in the global cannabis industry. Concurrent to the amendments, Gotham Green Partners, with participation from Wicklow Capital, has agreed to an additional US$30,000,000 equity commitment, bringing the total financing commitment to US$280,000,000. To date, Gotham Green Partners has funded US$100,000,000 of the total commitment.

Both Gotham Green and Wicklow have shown continued confidence in our strategy and recognize the potential ahead.

Adam Bierman, MedMen co-founder and CEO

In addition to funding general working capital, the increased financing commitment will primarily be used to:

• operationalize the balance of the Company’s retail licenses; the Company is licensed for up to 86 retail stores across the U.S., of which 37 are operational today (including the footprint to be acquired through pending acquisitions, subject to customary regulatory approvals);
• focus on strategic markets, such as Illinois, where the Company anticipates 10 stores after the state transitions from a medical to adult use market in 2020 and pending regulatory approvals associated with the PharmaCann acquisition;
• continue expanding the retail presence in Florida, where the Company expects to open 11 additional stores in 2019;
  remain opportunistic with respect to selective growth initiatives such as expanding the Company’s retail footprint and investing in its delivery and loyalty platforms and
• strengthen the Company’s balance sheet

MedMen’s strategy, brand and performance makes them the clear leader of cannabis retail in the U.S. and we are supportive of management’s vision and plan for growth and profitability. As their primary capital partner, we will continue to support the Company as they bring their iconic brand to new markets.

Jason Adler, managing member of Gotham Green Partners

Among other amendments, it is contemplated that the terms and conditions of the Facility will be amended such that:

• the trading price thresholds in respect of the Class B subordinate voting shares of the Company (the “Subordinate Voting Shares”) in order to access Tranche 2 and Tranche 3 of the Facility will be eliminated, giving the Company full access to the US$250,000,000 Facility.
• the conversion price per share of the senior secured convertible notes (“Notes”) in the aggregate principal amount of US$100,000,000 co-issued by the Company and MM CAN USA, Inc., a subsidiary of the Company, pursuant to Tranche 1 of the Facility will be changed from US$3.29 to US$2.55, which represents a 12% premium over the Company’s 20 trading day VWAP as of July 8, 2019.
• the method for calculating the conversion price per share of the Notes issuable pursuant to Tranches 2 and 3 of the Facility (which are each in the principal amount of US$75,000,000 and which have not yet been issued), will be changed from being equal to:
  • the lesser of (i) 115% of the 20 trading day volume weighted average trading price (“VWAP”) of the Subordinate Voting Shares as of the trading day immediately preceding the date of issue of the applicable Tranche, and (ii) US$7.00.

to being equal to:

• • the lesser of (i) the 20 trading day VWAP of the Subordinate Voting Shares as of the trading day immediately preceding the date the applicable Tranche is called by the Company, (ii) the 20 trading day VWAP of the Subordinate Voting Shares as of the trading day immediately preceding the date of issue of the applicable Tranche, and (iii) US$2.55.
• the Company will be able to force the conversion of up to 75% of the then outstanding Notes under the Facility if the VWAP of the Subordinate Voting Shares is at least US$6.20 for any 20 consecutive trading day period, at a conversion price per share equal to US$6.20, with both the forced conversion share price threshold and the conversion price per share being reduced from US$8.00.

It is expected that receipt of the initial portion of Tranche 2, in the aggregate principal amount of US$25,000,000, will be completed in the coming days. Notes in connection with this portion of Tranche 2 will have a conversion price per share determined in accordance with the amended method noted above.

As a Facility amendment fee, 15% of the outstanding principal amount of the Facility will be added to the balance of the Facility on the effective date of the Facility amendments (such outstanding principal amount is anticipated to be US$125,000,000, given the anticipated completion of the initial portion of Tranche 2 noted above). This amendment fee will be cancelled in the event that either (i) the Facility balance excluding the amendment fee is paid in full (inclusive of any other required fees or premiums), or (ii) a lender under the Facility elects to convert any portion of the Facility and the trading price of the Subordinate Voting Shares at the time of conversion is above US$2.95.

In addition, Gotham Green Partners and Wicklow Capital have committed to a US$30,000,000 non-brokered financing of Subordinate Voting Shares (the “Equity Placement”) at a price equal to US$2.37 per share. The Equity Placement is conditional upon the satisfaction of customary conditions, including but not limited to the receipt of all necessary approvals.