Multistate cannabis firm Acreage Holdings raises $60 million as part of restructuring plan

Bethan Rose Jenkins, Cannabis News Writer/Editorial

Acreage Holdings has secured agreements that will help the cannabis multistate operator to raise $60 million. Based on the details of a press release published on Monday, June 1, the money will be used to fund working capital, as well as for various other reasons. 

Based in British Columbia, Canada, vertically-integrated cannabis MSO Acreage has been working hard at cutting outgoing expenditure and overhead costs in recent times. The MSO is one of many spread across the U.S. to execute a restructuring plan amid COVID-19 and the current economic climate.

In previously reported news, Acreage had announced its intentions to sell unprofitable assets a desperate move to dig itself out of a financial hole. 

Cannabis MSO Acreage enters into two definitive funding agreements 

Based on the June 1 press release published by Globe NewsWire, Acreage Holdings confirmed that it had entered into two definitive funding agreements totaling $60,000,000 in gross proceeds. Included in the funding agreements are the following:

  • A Standby Equity Distribution Agreement (SEDA) with an institutional investor, under which Acreage may periodically sell to the investor at its discretion. The SEDA is pursuant to the company selling a maximum of $50,000,000 of the Company’s Class A Subordinate Voting Shares to the investor at its discretion.
  • The issuing of $11,000,000 in in principal amount under a secured convertible debenture as part of the company’s private placement offering; $10,000,000 of this amount was issued in gross proceeds before transaction fees.

The private placement that has been secured between Acreage and an unnamed Holder will cause dilution among existing stocks held by the shareholders. At a colossal $60 million, the total cost of the placement indicates the challenges that companies may face when they try to raise capital.

Although unidentified, the holder of Acreage’s $60 million private placement will have the chance to convert the entire amount of debt into stock for $1.68 a share. The deal is subject to specific limitations and prospective redemption opportunities on Acreage’s part. An interest rate of 15 percent will be piled on top of the debt, which has been secured by Acreage’s medical cannabis dispensaries spread across Connecticut. 

Acreage has laid off hundreds of employees recently 

On April 3, Acreage disclosed that it had furloughed 122 workers and would temporarily be shuttering some facilities spread across various U.S. states. Also noted in the news release was how the MSO had discarded a $120 million deal to acquire a Nevada cannabis company called Deep Roots, as well as the sale confirmation of an unprogressive real estate project in Massachusetts and its North Dakota-based medical cannabis operation. 

On a separate note, cannabis MSO Acreage recently announced that it would be writing down a pretax, noncash figure in the range of $80 million-$100 million for the quarter ending March 31, 2020. This depreciation is based on the company carrying out a range of planned operational changes to the business. Acreage hopes that the writedowns will help develop a positive EBITDA for 2020; non-inclusive of one-time transactions.

Pot stock traders can find Acreage trading on the Canadian Securities Exchange under the ticket ‘ACRG.U’ and on the U.S. over-the-counter markets as ‘ACRGF’.