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Follow on Google News | Medmen Has Rumors of BankruptcyBy: Infinity Broadcast Network MedMen has had no choice but to slash costs as the reality of the market set in, including the cancellation of a planned $682 million all-stock acquisition of PharmaCann LLC. After Wall Street reacted poorly to the company's selling, general and administrative expenses line of roughly $100 million. Executives have put in place a plan to cut $70 million of operating expenses by March. The company is also quietly shopping around a license it owns in New York, which may be worth $50 million to $100 million, Hundley says. It's also selling non-core assets in Arizona and Illinois, and pulling back on capital expenditures and slowing down store construction, according to the company's filings with Canadian regulators. In January, MedMen amended a $78 million loan that was due in 2020, to mature in 2022, though at a 15.5% coupon versus the 7.5% it had, and closed a $20 million stock offering of class B stock, which amounts to roughly 47 million shares. People need to understand one aspect: There can be no bankruptcy filing to protect Medmen from creditors because the Federal Government, which governs bankruptcy law and procedure, doesn't recognize cannabis companies. Therefore, Medmen is stuck with the reality of selling off assets, trimming down costs, and paying off vendors with stock, so long as they accept it. I suppose it's possible that the stock can't get any worse, but then again, Medmen hasn't been the best at fiscal responsibility. My guess is that Gotham Green Partners, which provided the $250 million convertible note, is holding Medmen's credit line hostage for failure to meet the defined minimum stock price threshholds. How Medmen will ever repay the Notes is beyond me. However, the Notes aren't due for almost 26 months, so only time will tell. Written by Dr. Wise https://youtu.be/ End
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