22nd Century Group Offloads Hemp/Cannabis Franchise In $2.25M Deal, Seeks To 'Reduce Cash And Operating Demands'
Portfolio Pulse from Nina Zdinjak
22nd Century Group, Inc. (NASDAQ:XXII) has agreed to sell its GVB Biopharma hemp/cannabis operations to Specialty Acquisition Corporation for $2.25 million. The deal includes a $1 million payment at closing and a $1.25 million secured promissory note. The sale aims to reduce cash and operating demands, with 22nd Century expecting to lower operating expenses beyond the $15 million in annual cost savings already announced. The company will retain rights to insurance proceeds from a fire at its Grass Valley facility, with damages sought at approximately $9 million. The sale is set to close in early December 2023, pending customary conditions and financing for the buyer. 22nd Century is also exploring strategic alternatives for its tobacco assets, including its FDA-approved VLN reduced nicotine content products.
November 28, 2023 | 2:35 pm
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22nd Century Group is selling its hemp/cannabis operations to reduce operating expenses and focus on its tobacco assets. The sale is expected to improve the company's financial position by reducing cash demands and leveraging the balance sheet.
The sale of the hemp/cannabis operations is a significant move for 22nd Century Group, aimed at reducing costs and focusing on its core tobacco business. The expected reduction in operating expenses and retention of insurance proceeds are positive indicators for the company's financial health. The strategic shift towards its FDA-approved tobacco products could also signal potential growth, making this news likely to be viewed positively by investors in the short term.
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