Jushi Holdings Inc. (CSE: JUSH, OTCQX: JUSHF), a vertically integrated, multi-state cannabis operator, has recently announced a significant financial maneuver aimed at bolstering its capital structure. The company has successfully factored approximately $5.1 million from Employee Retention Credit (ERC) refund claims and is set to issue additional second lien notes expected to generate net proceeds of about $4.6 million.
In a strategic move, Jushi’s affiliates sold around $6 million worth of ERC refund claims to a third party, resulting in net cash proceeds of approximately $5.1 million. This transaction not only provides immediate liquidity but also allows the company to retain rights to any interest accrued on these claims, which could further enhance its financial standing. So far, Jushi has received about $1.3 million from the IRS related to approved ERC refund claims, with an additional $3 million still pending.
Jim Cacioppo, Chairman and CEO of Jushi, emphasized the importance of this non-dilutive transaction, stating it enhances the company’s financial position and stability while enabling continued investment in its operations.
Alongside the ERC refund factoring, Jushi has secured binding subscriptions for the sale of approximately $5.1 million in second lien notes due in 2026. The anticipated net cash proceeds from this initiative are expected to be around $4.6 million. The notes will be governed by an existing Trust Indenture established on December 7, 2022.
Investors in these second lien notes will benefit from a 10% original issuance discount and will receive detachable five-year warrants at 75% coverage. The exercise price for these warrants will be set at a 50% premium over the volume-weighted average price of Jushi’s shares during a specified trading period, ensuring attractive terms for investors.
Notably, an entity affiliated with Cacioppo has committed approximately $3.7 million toward these notes, while Denis Arsenault, another key figure within the company, has subscribed for C$2 million worth of Canadian dollar-denominated notes.
The influx of cash from both the ERC refund claims and the second lien notes sale is poised to support Jushi’s strategic growth initiatives across its multi-state operations. The company is focused on maximizing shareholder value through opportunistic acquisitions and enhancing its portfolio of branded cannabis assets. As Jushi Holdings continues to navigate the complexities of the cannabis market, these financial strategies reflect the Company’s commitment to strengthening its balance sheet and ensuring sustainable growth in an evolving industry landscape.
