Agrify amends credit facility to reduce balance, eliminate covenants

By Marisa Wong

Los Angeles, March 9 – Agrify Corp. announced it signed a definitive agreement with its institutional lender to amend its existing credit facility, according to a press release.

The amendment significantly reduces the outstanding principal to about $11,675,000 from $32 million and eliminates working capital and restricted cash covenants to give the company more flexibility to pursue future growth.

The amendment also revises the merger and acquisition covenant to permit acquisitions using stock as consideration.

The transaction is expected to result in interest expense savings of roughly $1 million annually.

Transaction details

Under the agreement between Agrify and its lender, at closing on March 8 Agrify exchanged $10 million of the balance of its original $35 million 9% senior secured promissory note issued in August 2022 for a new senior secured convertible note totaling $10 million. The new 9% note matures in August 2025 and is convertible at $0.3820 per share.

Agrify also prepaid in cash about $10.3 million of the remaining balance of the August 2022 note.

In addition, the exchange agreement provides that the lender may, at its option, elect to exchange an additional $10 million under the August 2022 note for an additional $10 million convertible note on Aug. 19.

Agrify will also agree to repay at least a further $3 million of the August 2022 note before Dec. 31, 2023, and any cash sweep from future equity raises will count towards the repayment.

Should Agrify raise at least a further $8 million in equity before Aug. 19, the lender will be prohibited from exercising its right to redeem the August 2022 note or the convertible note in August 2023.

The lender will be entitled to a cash sweep of 30% of any proceeds received by Agrify in connection with any at-the-market equity financing, which will reduce the outstanding principal amount under the respective notes.

Agrify is a cannabis cultivation and extraction products company based in Billerica, Mass.

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