Key Takeaways
- Hydrofarm Holdings Group (Nasdaq: HYFM) completed the sale of Aurora Peat Products ULC to Raven Holdings LLC for $16 million, including a $5 million promissory note.
- Sale proceeds will go toward reducing Hydrofarm’s outstanding Term Loan debt and cutting the capital costs of owning peat harvesting assets.
- Aurora Peat will keep supplying Hydrofarm’s grow media business, and Hydrofarm will continue distributing Aurora Peat’s consumer gardening products under a supply agreement.
- Hydrofarm also launched Project Agility, an initiative to scale its logistics services platform into adjacent high-growth sectors.
- CEO Bill Toler said the divestiture simplifies Hydrofarm’s operating model while the company sharpens its focus on its core CEA business.
Hydrofarm Completes $16 Million Aurora Peat Sale
Hydrofarm Holdings Group, Inc. (Nasdaq: HYFM) has completed the sale of Aurora Peat Products ULC to Raven Holdings LLC, a private company, for total consideration of $16 million. A portion of that amount, $5 million, is represented by a promissory note.
Deal Terms and Use of Proceeds
Hydrofarm said it will apply the sale proceeds toward reducing its outstanding Term Loan debt. The company also said the divestiture removes the capital spending tied to owning and operating peat harvesting assets. Aurora Peat will continue producing and marketing peat products for the global horticultural market under its new private ownership, led by longtime operators in the peat industry.
“The Aurora Peat sale is a key strategic step toward optimizing our portfolio and focus, and strengthening the Company’s capital structure,” said Bill Toler, Chief Executive Officer of Hydrofarm. “Aurora Peat is a sound business, and it is going to owners who know the peat industry well. For Hydrofarm, the divestiture continues to simplify our operating model and reduce debt.”
A Continued Supply Relationship
The two companies will maintain a commercial relationship after the sale. Aurora Peat remains a supplier to Hydrofarm’s grow media business, and Hydrofarm will continue distributing Aurora Peat’s consumer gardening products under the terms of a supply agreement.
“As part of Aurora Peat Products’ previous management team, several key members and I are grateful to return with the opportunity to carry the business forward to a new level of success,” said Bowe McGinnis, Manager of Raven Holdings LLC. “We deeply value our continuing relationship with Hydrofarm, a key partner on the supply side.”
Hydrofarm Launches Project Agility for Logistics
Alongside the Aurora Peat sale, Hydrofarm announced Project Agility, an initiative to direct resources toward scaling its logistics services platform. The company said it will use the initiative to pursue opportunities in adjacent high-growth sectors.
“The actions in our announcement today support a change in Hydrofarm’s trajectory – we are now a leaner and more focused organization,” said Eric Ceresnie, Senior Vice President of Strategy, Corporate Development and International Markets at Hydrofarm. “We are also excited to announce Project Agility, which will drive resources to scale our logistics services platform as we pursue opportunities in adjacent high-growth sectors.”
Hydrofarm manufactures and distributes branded hydroponics equipment and supplies for controlled environment agriculture, including grow lights, climate control systems, and grow media and nutrients.
