MedMen stock continues to move lower for the fifth straight trading session after MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF) announced on Friday that it has executed the term sheet for a dilutive equity financing of $20 million as part of fundraising totaling $74 million.
Another Equity Dilution
2019 has not been a great year for the cannabis industry as a whole, and many of the leading companies in the sector have seen their stock prices drop considerably. In that regard, MedMen has not been an exception and has seen its stock price plummet this year. Recently, the company made a key announcement that resulted in another steep drop in the stock price.
On Friday, MedMen Enterprises announced that it has decided to raise $20 million by diluting some of its equity and, naturally, that was not well received by investors.
MedMen revealed that it has completed the term sheet for this. It is part of a wider fundraising effort in which the company wishes to raise $74 million. MedMen stock tanked by as much as 7.30% on Friday after the news emerged. The stock is down another 8.20% this morning.
That is not all. The rest of the money is going to be raised by MedMen by selling off its licenses in Arizona for a combined $54 million. In a statement, MedMen Enterprises said that it will continue to explore options with regards to the sale of more of its non-core assets in the near future.
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Cost-Cutting Measure
Earlier this month, MedMen made another announcement that had a positive effect on MedMen stock and helped it recoup some of the losses of the previous weeks. Earlier, the company had announced that it was going to lay off 20% of its staff from the corporate office. This month, it announced that it has laid off a further 20% of its staff and the total reduction now stands at 40%.
The annual expenses have also been reduced to $65 million, which is a significant improvement from the previously targeted $85 million. The President of the company has also given up his super-voting rights on 815,295 class A shares of the company.
MedMen stock is currently trading for $0.45 USD, having lost nearly 86% of its value in the year to date.
Featured image: Canva
