DENVER — Medicine Man Technologies Inc., operating as Schwazze, has entered into a Restructuring Support Agreement (“RSA”) with an affiliate of Vireo Growth Inc., which holds a majority of the Company’s outstanding 13% senior secured notes due December 7, 2026, the holders of certain outstanding deferred cash seller notes (the “Star Buds seller notes”) and certain other parties.
The RSA sets forth a plan to restructure the operations and capital structure of the Company and its subsidiaries through a series of transactions, including, but not limited to, the sale of certain assets representing a majority of the total assets of the Company and its subsidiaries to a newly-formed entity (“NewCo”) to be majority-owned by Vireo, and the liquidation and winding down of the Company’s remaining operations. The transactions contemplated by the RSA are expected to result in the continuation of business as a new company with less debt, improved liquidity and a streamlined asset portfolio.
Pursuant to the RSA, the collateral agent under the indenture governing the Senior Secured Notes, acting at the direction of Vireo, will submit a credit bid at an auction contemplated to be held in connection with the Asset Sale. If the credit bid is successful, the Company will enter into an asset purchase agreement with NewCo pursuant to which, subject to receipt of regulatory approvals and other closing conditions, the assets subject to the Asset Sale would be transferred to NewCo in consideration for an assumption by NewCo of certain specified liabilities of the Company and a discharge of all or a majority of the Senior Secured Notes. Certain parties have also agreed to provide NewCo with up to approximately $62 million in financing, the proceeds of which will be used to refinance the Star Buds seller notes, pay transaction expenses and provide NewCo with working capital.
Any remaining assets of the Company not purchased in the Asset Sale would be subject to a wind down, and the remaining liabilities of, and equity interests in, the Company will receive the net proceeds (if any) from the wind down proceedings in accordance with their relative priorities under applicable law.
Further information about the RSA and the contemplated transactions is included in a Current Report on Form 8-K being filed today by the Company with the U.S. Securities and Exchange Commission.
Completion of the transactions contemplated by the RSA are subject to certain conditions, including regulatory approval where applicable.
The Company is represented by Polsinelli PC as its legal counsel and Oppenheimer & Co. Inc. as its financial advisor.
