6th October 2022
Regenerative agriculture AgriHub
Corporate Funding Round Stock Market

Agrify Completes Credit Facility Modification

Agrify Corp Q1 2022

Agrify Corporation (Nasdaq:AGFY), today announced it has signed a definitive agreement with its institutional lender to successfully amend its existing credit facility.

“Given the current challenging operating environment in the cannabis industry, it is imperative for us to align our strategy, resources, and execution plan with the new realities of the market,” said Raymond Chang, Chairman and Chief Executive Officer of Agrify. “Modifying our credit facility has been a top priority for us, and we are pleased to be able to move forward with additional flexibility to manage our business, conserve cash, and pursue a variety of compelling growth opportunities with fewer restrictions. As part of this transaction, we will be paying down a portion of the outstanding balance on the original note, exchanging the remaining balance under the original note for a new note with a significantly reduced principal balance, and removing or modifying certain financial covenants. The new note will have no required amortization payments on the principal balance for three years and a Company option for early repayment. All of these modifications should make it easier for us to navigate through these turbulent times as we look forward to rebounding strongly from the temporary challenges facing the entire industry.”

Transaction Terms

Pursuant to the modification, Agrify will partially prepay the senior secured note originally issued to the lender in March 2022, and exchange the remaining balance of the Original Note for

  • (i) a new senior secured note with an original principal amount of $35.0 million and
  • (ii) a new warrant to purchase 14,227,643 shares of common stock. Additionally, Agrify will exchange the warrant to purchase 6,881,108 shares of common stock issued in the Prior Closing for a new warrant with the same number of underlying shares but with a reduced exercise price.

The Note will mature on the three-year anniversary of its issuance and will contain a 9.0% annualized interest rate, with interest to be paid monthly, in cash, beginning September 1, 2022. The principal amount of the Note will be payable on the Maturity Date, provided that the lender will be entitled to a cash sweep of 20% of the proceeds received by Agrify in connection with any equity financing, which will reduce the outstanding principal amount under the Note.

At any time, Agrify may prepay all of the Note by redemption at a price equal to 102.5% of the then-outstanding principal amount under the Note plus accrued but unpaid interest. The Lender will also have the option of requiring Agrify to redeem the Note

  • (i) on the one-year or two-year anniversaries of issuance at a price equal to the then-outstanding principal amount under the Note plus accrued but unpaid interest or
  • (ii) if Agrify undergoes a fundamental change at a price equal to 102.5% of the then-outstanding principal amount under the Note plus accrued but unpaid interest.

The Note will impose certain customary affirmative and negative covenants upon Agrify but will not include the revenue or EBITDA covenants included in the Original Note. Further, if an event of default under the Note occurs, the Lender will be able to elect to redeem the Note for cash equal to 115% of the then-outstanding principal amount of the Note (or such lesser principal amount accelerated by the Lender) plus accrued and unpaid interest thereon.

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