By Mary-Katherine Stinson
Lexington, Ky., Aug. 19 – Agrify Corp. signed a 9% senior secured note facility for $35 million and a new warrant to purchase 14,227,643 shares of common stock, according to a press release Friday.
The facility has a three-year tenor.
Starting Sept. 1, amortization payments of 9% of original principal are required monthly.
Payment on the facility is due at maturity 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.
At initial funding, the warrant exchange warrant will have an exercise price of $2.15 per share, exercisable on and after the six-month anniversary of issuance, for five years. The note exchange warrant will have an exercise price of $1.23 per share for 5.5 years after issuance.
Until the company completes a qualified equity financing of at least $15 million, the note exchange warrant’s exercise price will be reduced to the extent Agrify issues securities for a lower purchase price.
The warrants include a limitation that the lender’s beneficial ownership is not to exceed 4.99% of the company’s shares outstanding at the time of exercise. The percentage may be increased or decreased by lender subject to terms of the warrants but may not exceed 9.99%.
Additionally, the lender may not exercise the warrant exchange warrant and/or note exchange warrant for more than 5,308,578 shares of common stock unless and until shareholder approval is obtained. The company will seek this shareholder approval at the next shareholders’ meeting no later than June 30, 2023.
Agrify may prepay the note anytime by redemption at 102.5 of the then-outstanding principal. The lender may also of require Agrify to redeem the note on the one-year or two-year anniversaries of issuance at par.
If there is a fundamental change, the note will be putable at 102.5.
In the case of a default, the lender can elect a redemption for cash at 115, or a lesser amount accelerated by the lender, plus interest.
Until the note is repaid in full the lender will have the right to participate in up to 30% of any debt, preferred stock or equity-linked financing of company or its subsidiaries.
Billerica, Mass.-based Agrify is a provider of premium cultivation and extraction solutions for the cannabis and hemp industry.
| Issuer: | Agrify Corp.
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| Amount: | $35 million
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| Issue: | Senior secured notes
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| Tenor: | Three years
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| Coupon: | 9%
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| Warrants: | Warrant exchange warrant will have an exercise price of $2.15 per share beginning six months after issuance for five years. Note exchange warrant will have an exercise price of $1.23 per share at issuance for 5.5 years
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| Call features: | Anytime at 102.5
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| Put option: | At par on one-year and two-year anniversaries or at 102.5 upon a fundamental change
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| Announcement date: | Aug. 19
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| Distribution: | Private placement
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