Greenlane Holdings, Inc. (NASDAQ: GNLN) has said it has a plan to generate more than $30 million in liquidity. Part of the company’s strategy to achieve this goal includes getting a loan to cover its working capital needs, selling the company’s headquarters building in Boca Raton Florida, and getting rid of non-sore and lower-margin inventory. Greenlane has been through a series of struggles since the company’s salad days of selling Juul vapes. When regulators cracked down on flavored vapes that were drawing teen consumers, Greenlane lost a lot of business. It moved into cannabis accessories, but that wasn’t nearly enough to offset the loss of business and then the company merged with KushCo cannabis packaging. KushCo ran into its own problems with the cannabis vape crisis, which was followed by supply chain disruptions during the pandemic. Since then the company has struggled to steady itself.
Getting a Loan
Greenlane said in a statement that for the past three months it has been engaged in an intensive and comprehensive process to select the ideal partner for an asset-based loan that can support its working capital needs. The company said it expects to execute an agreement by the early third quarter of 2022, which is expected to result in more than $10 million of liquidity. As of the last quarter, the company has current liabilities of $77 million and total liabilities of $91 million. In December 2021, Greenlane entered into a Secured Promissory Note with Aaron LoCascio, the co-founder, former Chief Executive Officer, President, and a current director of the company, in which LoCascio provided a bridge loan in the principal amount of $8.0 million which accrues interest at a rate of 15% and is due monthly, and the principal amount is due in full in June 2022.
In addition, Greenlane has listed its headquarters building for sale in May 2022 and that it has gotten significant interest from several buyers amidst a strong Florida commercial real estate market. “Given management’s decision to move to a hybrid work model, the company plans to lease the top floor to another tenant until the building is sold. Along with this initiative, the company is in the process of selling other non-core assets, which if sold together with the building at the sales price anticipated by management, is expected to generate an additional $10 million of liquidity.”
Selling Off Inventory
Finally, the Company is working to sell through its excess & obsolete (“E&O”) inventory of lower-margin, non-strategic products, along with reducing the overall level of inventory on hand. In May, the Company commenced its official E&O sales program internally and has since sold more than $1 million of previously reserved E&O inventory. Management anticipates that the proceeds from these E&O sales, combined with a general sell-down of other non-core third-party brand inventory, is expected to generate more than $10 million of liquidity for the Company.
With all of these moves, Greenlane thinks it can generate more than $30 million of liquidity on a non-dilutive basis by the end of 2022 if all these measures are successful.
“We are excited by the speed and scale of our efforts to generate substantial non-dilutive liquidity, especially against the backdrop of this challenging macro environment,” said Nick Kovacevich, CEO of Greenlane. “Given the current depressed state of the broader capital markets, we are hyper focused on fully executing this plan to drive the liquidity we need to run and grow the business.”
Greenlane Sells Off Assets To Generate Cash on Green Market Report.