MedMen stock is making gains on Thursday after MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF) announced more layoffs as part of a financial restructuring program at the embattled pot firm.
Additional Layoffs
“This week, the company provided layoff notices to an additional 20% of its corporate-level employees,” MedMen said in a press release on Wednesday. “In total, over the past 30 days, the company has strategically reduced its corporate headcount by over 40%, representing approximately $20 million in annual salary-related savings.” The announcement comes less than a month after the troubled company said it would be laying off 190 staff members, including 80 corporate positions. MedMen stock has soared over 10% following the news.
MedMen Enterprises reported its Q1 fiscal 2020 results towards the end of November, which revealed some startling figures for investors. For the period ended September 28, 2019, the company posted a gross profit of $21.8 million USD despite expenses totaling $66.1 million USD, while revenue came in at $43.9 million USD, well short of the expected figure of $47.7 million USD. With the company's financial position teething on perilous and MedMen stock trading near an all-time low, it's no surprise to see investors greet today's plan with optimism.
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New Financing Driving Gains for MedMen Stock
Under the new financing plan, MedMen Enterprises will raise $37 million USD through additional debt, with a further $27 million USD raised by way of a non-brokered offering of subordinate voting shares at a price per share of $0.43 USD. This equity placement is expected to close on December 18, but the issued shares will be subject to a four-month holding period from the closing date. Capital raised from the offering will be used to continue the company retail expansion in key geographic areas. MedMen stock is currently trading for $0.63 on the Canadian Securities Exchange.
Those key geographic areas include California, Illinois, Nevada, and Florida, where MedMen has already pursued an aggressive expansion strategy. As per yesterday's announcement, MedMen Enterprises also revealed that it has closed on its acquisition of PharmaCann’s Evanston, Illinois location. This acquisition is under the terms of its terminated deal to wholly acquire PharmaCann, in which it agreed to write off $21 million USD in debt. With MedMen stock down over 85% this year, it looks like it may finally have turned a corner.
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