IM Cannabis Corp. Plans Major Debt Reduction with Sale of European Assets

IM Cannabis Corp. Moves Towards Financial Restructuring

In a significant move towards enhancing its financial health, IM Cannabis Corp. (NASDAQ: IMCC) has announced their intent to sell their European operations, which is expected to reduce the company's debt burden by CAD$10.5 million. This decision arrives as part of a broader strategy to streamline IMC's operations, allowing them to concentrate on their core Israeli business while exploring new investment opportunities.

Letter of Intent to Sell European Operations

On June 18, 2026, IM Cannabis disclosed it has entered a non-binding letter of intent with Slil.com Holding Ltd., a private entity controlled by CEO Oren Shuster. The proposed transaction involves the sale of IMC's wholly owned subsidiary, I.M.C. Holdings Ltd., which primarily manages the company’s European assets, including their German subsidiary, Adjupharm GmbH, as well as stakes in Xinteza API Ltd. and Shiran Societe Anonyme.

Under the terms of this agreement, Slil will assume approximately CAD$10.5 million in debt linked to IMC Holdings, alleviating a substantial amount of financial burden and allowing IM Cannabis to pivot its focus back to the Israeli market. Following the transaction's completion, the company will retain its core operations in Israel, including subsidiaries like Focus Medical Herbs Ltd. and Rosen High Way Ltd., which serve the medical cannabis patient base in the region.

Expected Financial and Operational Benefits

The anticipated advantages of this transaction are multi-faceted. By offloading European assets, IM Cannabis aims to secure improved working capital, which is essential for maintaining operational stability. The reduction in debt is aimed at strengthening the balance sheet, enhancing cash flow, and overall operational efficiency. This shift not only reflects a commitment to long-term shareholder value but positions IMC to explore additional investment opportunities that align with its strategic goals.

In a statement, IMC emphasized the importance of this transaction, asserting that it may lead to substantial benefits such as enhanced cash flow and operational efficiency which are critical for the future growth of the company.

Independent Review and Regulatory Compliance

To ensure the transaction meets regulatory standards and fair practices, IM Cannabis has constituted a special committee of independent directors to oversee the evaluation and review process. Additionally, the company enlisted the services of Beta Finance T.Y.S Ltd., an independent financial consulting firm based in Israel, to prepare a report that will assist in determining the fairness of the deal. This procedural step emphasizes IMC's commitment to transparency and good governance.

Since the transaction involves a 'related party' (Slil, controlled by a company executive), it is categorized under strict regulatory frameworks, notably Multilateral Instrument 61-101. This necessitates shareholder approval and formal valuation; however, IM Cannabis intends to leverage exemptions based on the financial hardships faced by the company, thus expediting the process.

Looking Ahead

IM Cannabis Corp. is determined to navigate this transition effectively, as they believe this strategic sale will not only alleviate pressures but also set the stage for future growth within the burgeoning medical cannabis sector. Their ongoing operations in Israel continue to serve a vital role, providing medical cannabis products to patients while upholding high standards of quality and delivery through their network of retail pharmacies.

In summary, this transaction not only marks a pivotal point for IM Cannabis but also highlights the ongoing evolution within the cannabis landscape. With a firm commitment to regaining financial stability and exploring innovative market avenues, IM Cannabis is poised for potential growth and market influence in the near future.