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Biotech company 22nd Century Group is selling off its hemp operations in a deal worth $2.25 million as part of an attempt to cut costs.
“Substantially all” of the company’s GVB Biopharma division is being sold to Specialty Acquisition Corp., a Nevada business “affiliated with current GVB employees,” 22nd Century said in a Monday news release.
The purchase price includes $1 million in cash, and the buyer is issuing a 12%, $1.25 million promissory note.
“The company plans to use the proceeds from the sale to further deleverage its balance sheet,” 22nd Century said.
The Buffalo, New York-based company said it also will retain the right to recoup an unresolved insurance payout from a 2022 fire at a GVB manufacturing facility in Grass Valley, Oregon.
The facility is currently worth about $9 million, according to 22nd Century.
The deal is scheduled to close in December, subject to closing conditions including the buyer’s financing and consent from 22nd Century’s senior lender.
The sale “will immediately and materially further reduce the cash and operating demands within our business,” 22nd Century interim CEO John Miller said in a statement.
The sales comes on the heels of an October announcement by 22nd Century that it had reduced its senior secured debt by $8.1 million.
The company launched a $5.25 million public offering in October as well.
In September, 22nd Century said it was exploring strategic alternatives in order to maximize shareholder value.