Juul secures funds to stay afloat, plans to cut 400 jobs
Reuters
Published Nov 10, 2022 11:42AM ET
Updated Nov 10, 2022 01:31PM ET
By Ananya Mariam Rajesh and Deborah Mary Sophia
(Reuters) - Juul Labs Inc has secured an investment from some of its early investors that will keep the e-cigarette maker in business, the company said on Thursday, adding that it will also undertake job cuts as part of a reorganization.
The once red-hot vaping company plans to lay off about 400 people and reduce its operating budget by 30% to 40%.
The company said the investment would help Juul run its business operations, while it goes ahead with its administrative appeal of the U.S. Food and Drug Administration's marketing denial order related to its e-cigarettes.
The company did not disclose the size of the investment.
Last month, the Wall Street Journal reported Juul was preparing to file for Chapter 11 bankruptcy while searching for an alternative — such as a sale, investment or loan — that could stave off a filing.
Juul's e-cigarettes were briefly banned in the U.S. in late June after the FDA concluded that the company had failed to show that the sale of its products would be appropriate for public health. But following an appeal, the health regulator put the ban on hold and agreed to an additional review of Juul's marketing application.
In July, the company said it was in the early stages of exploring options including financing alternatives, as it had to deal with lawsuits related to marketing of its e-cigarettes.
The financing is the first piece of a bailout package under discussion with two of Juul's biggest investors, Hyatt Hotels (NYSE:H) heir Nick Pritzker and California investor Riaz Valani, according a Journal report on Thursday.
In late September, Marlboro maker Altria Group (NYSE:MO) Inc, which partly owns Juul, exercised the option to be released from its non-compete deal with the e-cigarette company almost four years after buying a 35% stake in the company.
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Written By: Reuters
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