NASDAQ Hemp And Tobacco Company Slashes Debt, Boosts Savings

22nd Century Group, Inc. XXII has reduced the outstanding principle of its senior secured credit facility from roughly $22.1 million to approximately $14 million as part of an amendment and waiver process with its lenders.

What Happened

The reduction reflects a waiver and repayment of the $7.5 million minimum cash balance required under terms of the original debenture agreements, which was held in an escrow account, the Buffalo-based company said on Wednesday.

22nd Century also assigned an existing promissory note related to the company's previous holdings in Panacea Life Science Holdings as an additional consideration in the debt reduction transaction.

In a non-monetary exchange, the assigned value of the promissory note was allocated as $600,000 to further principal reduction and $2 million in a decrease in the put price associated with the lenders' outstanding warrants, which portion was subsequently canceled.

Why It Matters

Hugh Kinsman, the company's CFO, said the move is expected to result in annual cash interest savings of roughly $500,000.

"The reduction in principal amounts owed under the senior secured credit facility as a result of the amendment and waiver will provide for annual cash interest savings of approximately $0.5 million per year," Kinsman said.

What's Next

The remaining principal loan balance of $14 million and the remaining $500,000 of the put price will be due at maturity in 2026.

After the debt reduction, the company announced the consummation of a public offering with $5.25 million in gross proceeds, which will be used for general operating purposes.

"We continue to actively manage our balance sheet, with a focus on executing our cost reduction initiatives," Kinsman continued.

Did you miss the first wave of cannabis investments? Don’t make that mistake again.
Experts believe cannabis stocks have found their floor and are now poised for unprecedented growth.
Join Benzinga PotProfits. Benefit from Michael Berger's sharp analysis, revealing top cannabis stock opportunities and timely updates.
Experience the potential of 10%+ returns in just 90 days. Our 4.5-star Marketfy rating speaks volumes. Secure your position in this booming sector with a 30-day money-back guarantee. The time to invest is now, before everyone else realizes it. Secure your profits with Benzinga. Click here now to learn more.

XXII Price Action

22nd Century's shares traded 2.4096% higher at $0.51 per share at the time of writing on Wednesday morning.

Related News

• This NASDAQ Hemp And Tobacco Stock Is Trading Lower Post Q2 Earnings Report, Here's Why
• Why 22nd Century Group Are Trading Lower By Around 20%? Here Are Other Stocks Moving In Monday's Mid-Day Session

Photo: Courtesy of Josh Appel on Unsplash