MedMen stock is continuing to slide on Friday after CEO Adam Bierman issued a response to the ongoing vendor payment crisis, which has led some to believe that MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF) may be on the verge of bankruptcy.
Vendors Offered MedMen Stock as Payment
Rumors began circulating on social media earlier this week that the troubled cannabis firm was offering vendors MedMen stock options as a means of payment, prompting many to speculate that the company was preparing to declare chapter 11 bankruptcy. While those stock payment rumors turned out to be true after an email leaked from MedMen was verified by several major outlets and then confirmed by CFO Zeeshan Hyder, the bankruptcy concerns are yet to be verified, but investors will no doubt be fearful of the precarious position that the company now finds itself in.
Now, CEO Adam Bierman has attempted to allay those fears by saying MedMen Enterprises is currently in a restructuring period and that issuing stock as payment is common practice in such a situation. "During that timeframe, we stopped payments to certain vendors as would be commonplace in the restructuring of a retailer. We turned over our accounts payable to a restructuring consulting firm (FTI Consulting) so that we could preserve and allocate the cash as we got through and out the other end of restructuring." MedMen stock is down 6.5% today.
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Capital Financing Plan
Bierman added that MedMen is "probably 30 days away" from exiting the period of restructuring and that "our cash position is very healthy, our balance sheet is strong." The embattled California-based firm has been busy offloading several non-core assets and reducing its equity in order to bring in some capital. The company has already sold three vertically-integrated licenses in Arizona, as well as a binding term sheet for the sale of a cultivation and manufacturing license in Illinois as part of a US$74 million capital financing plan.
MedMen stock has tanked an alarming 87% in the last 12 months to just $0.58, as allegations of financial mismanagement and a toxic corporate environment continue to be thrown at the company. While management has moved to put investors' fears to bed with recent comments, it's clear that there looks to be more hardship ahead for MedMen Enterprises.
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