MedMen Enterprises Inc., a cannabis company that operates in nine states, has offered its vendors shares in the company in an attempt to reduce its overhead and conserve cash, MarketWatch reports. The payment proposals come after MedMed’s “restructuring” last year, the company’s chief financial officer Zeeshan Hyder told MarketWatch, adding that MedMen “has been actively working with its retail vendors on modifying payment terms, which in some cases include stock consideration.”
“The company has been increasingly focused on managing its working capital and has continued to communicate payment status to its key vendors.” – Hyder, to MarketWatch
MedMen offered at least one vendor the full amount owed in class B non-voting shares, a payment plan for the full value, or a one-time cash payment of half of the outstanding bill. According to the report, MedMen’s over-the-counter and Canadian Securities Exchange-listed stock has lost 84 percent of its value over the last year.
Seaport Global analyst Brett Hundley told MarketWatch that if a small amount of stock were used to pay some bills it probably wouldn’t dilute the shares or affect the stock price much because the company already has more than 588.4 million outstanding shares. MedMen management has indicated they don’t expect to be able to access the remaining $115 million available to it from a 2019 $250 million convertible debt deal.
In January, MedMen amended a $78 million loan that was due in 2020, to mature in 2022, but at a 15.5 percent coupon versus the original 7.5 percent. MedMen also cancelled a $682 million all-stock deal of PharmaCann LLC, is reportedly shopping its New York licenses, and is selling non-core assets in Arizona and Illinois. MedMen executives have also enacted a plan to cut about $70 million of operating expenses by March, the report says.
During the fiscal first quarter, MedMen reported $44 million in revenue.