- Greenlane Holdings Inc (NASDAQ: GNLN) stock price jumped more than 29% ahead of market today. That is why.
Greenlane Holdings Inc (NASDAQ: GNLN) stock price jumped more than 29% ahead of market today. Investors are reacting positively to Greenlane Holdings providing an update on its strategy to generate more than $30 million in cash, as part of its previously announced strategic plan to reduce its cost structure, accelerate its path to profitability and increase liquidity on a non-dilutive basis.
As previously announced in March 2022, this strategy to generate $30 million of non-dilutive cash includes the following key elements:
1.) Securing an asset-based loan to meet working capital needs;
2.) Sell the corporate headquarters in Boca Raton, Florida; and,
3.) Discontinue and eliminate non-essential and low-margin inventory.
Over the past 3 months, Greenlane has engaged in an intensive and comprehensive process to select the ideal asset-based lending partner that can support its working capital needs. And the company is in negotiations regarding this loan facility and expects to sign an agreement by early Q3 2022, which should result in over $10 million in cash.
Additionally, the company put its headquarters up for sale in May 2022 and has garnered considerable interest from several buyers amid a strong commercial real estate market in Florida. And given management’s decision to transition to a hybrid working 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 with the building at management’s anticipated sale price, should generate an additional $10 million in cash.
Greenlane also strives to sell through its Excess and Obsolete (“E&O”) inventory low-margin and non-strategic products, while reducing the overall level of inventory on hand. In May, Greenlane launched its official in-house E&O sales program and has since sold over $1 million of previously reserved E&O inventory. Management expects proceeds from these E&O sales, combined with a general sale of other non-essential third-party brand inventory, to generate more than $10 million in cash for the company.
In total, Greenlane estimates it can generate over $30 million in cash on a non-dilutive basis by the end of 2022 if all of these measures are successful.
“We are excited by the speed and scale of our efforts to generate significant non-dilutive cash, especially in the context of this challenging macroeconomic environment. Given the current depressed state of the broader capital markets, we are extremely focused on fully executing this plan to generate the cash we need to run and grow the business.
—Nick Kovacevich, CEO of Greenlane
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