Sale and Related Actions Ultimately Expected to Reduce Debt Principal by $5.2 Million
Buffalo, New York--(Newsfile Corp. - December 14, 2023) - 22nd Century Group, Inc. (NASDAQ: XXII) (the "Company" or "22nd Century"), a biotechnology company focused on utilizing advanced plant technologies to improve health and wellness, today announced it has secured the consent of its senior lender under the terms of its Senior Secured Credit Facility for the previously announced sale of its GVB Biopharma ("GVB") hemp/cannabis operations to Specialty Acquisition Corporation, a Nevada corporation (the "Buyer"), an entity affiliated with current GVB employees.
The updated transaction terms include a cash payment of $1.1 million from the Buyer at closing of the sale (the "Closing") and a secured promissory note for $2.0 million issued by the Buyer to the Company's senior lender to be paid by the end of June 2024. Additionally, 22nd Century will pay $1.1 million of cash-on-hand toward additional debt reduction and assign a non-strategic hemp/cannabis asset in Colorado to the senior lender as a non-monetary transaction resulting in debt reduction of $1.0 million. After the Buyer has paid the note in full, the transaction would result in a cumulative reduction of $5.2 million in outstanding principal, with the remaining outstanding principal expected to be approximately $8.8 million.
"We are pleased to announce further debt reduction as part of the lender consent process, representing substantial progress toward our goal of extinguishing the remaining principal balance of our Senior Secured Credit Facility by the end of the third quarter 2024," stated Larry Firestone, Chairman and Chief Executive Officer of 22nd Century. "We also believe the divestiture of our GVB hemp/cannabis franchise and corporate-wide cost cutting initiatives will substantially reduce the operating costs of our business. We are fully focused on creating value for our shareholders by operating our tobacco assets, including our VLN® reduced nicotine content products authorized by the FDA for harm reduction, in a sustainable, cash positive manner."
As previously announced, insurance proceeds expected to be received in connection with the fire at the Company's Grass Valley manufacturing facility will be used to further reduce the debt. At present, damages being sought are approximately $9 million, although the amount received will not be finalized until resolution of the matter.
The sale is expected to close in December 2023, subject to customary closing conditions.
About 22nd Century Group, Inc.
22nd Century Group, Inc. (NASDAQ: XXII) is an agricultural biotechnology company focused on tobacco harm reduction, reduced nicotine tobacco and improving health and wellness through plant science. With dozens of patents allowing it to control nicotine biosynthesis in the tobacco plant, the Company has developed proprietary reduced nicotine content (RNC) tobacco plants and cigarettes, which have become the cornerstone of the FDA's Comprehensive Plan to address the widespread death and disease caused by smoking. The Company received the first and only FDA Modified Risk Tobacco Product (MRTP) authorization for a combustible cigarette in December 2021. 22nd Century uses modern plant breeding technologies, including genetic engineering, gene-editing, and molecular breeding to deliver solutions for the life science and consumer products industries by creating new, proprietary plants with optimized alkaloid and flavonoid profiles as well as improved yields and valuable agronomic traits.
Learn more at xxiicentury.com, on Twitter, on LinkedIn, and on YouTube.
Learn more about VLN® at tryvln.com.
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Cautionary Note Regarding Forward-Looking Statements
Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements, including but not limited to our full year business outlook. Forward-looking statements typically contain terms such as "anticipate," "believe," "consider," "continue," "could," "estimate," "expect," "explore," "foresee," "goal," "guidance," "intend," "likely," "may," "plan," "potential," "predict," "preliminary," "probable," "project," "promising," "seek," "should," "will," "would," and similar expressions. Forward-looking statements include, but are not limited to, statements regarding (i) the sale of our hemp/cannabis business, including the GVB assets, (ii) our expectations regarding our future operating expenses and cash flow, (iii) our expectations on the timing and completion of the sale of our hemp/cannabis business, and (iv) our expectations for our business interruption insurance claim. Actual results might differ materially from those explicit or implicit in forward-looking statements. Important factors that could cause actual results to differ materially are set forth in "Risk Factors" in the Company's Annual Report on Form 10-K filed on March 9, 2023 and Quarterly Reports on Form 10-Q filed May 9, 2023, August 14, 2023 and November 6, 2023. All information provided in this press release is as of the date hereof, and the Company assumes no obligation to and does not intend to update these forward-looking statements, except as required by law.
Investor Relations & Media Contact
Matt Kreps
Investor Relations
22nd Century Group
mkreps@xxiicentury.com
214-597-8200
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/191079
