Agrify, an ancillary cannabis cultivation company, signed a definitive agreement to raise as much as $135 million in capital from a debt financing to strengthen its balance sheet and support continued growth.
Under the senior secured debt facility, $65 million will be immediately available at closing, the Massachusetts-based developer of indoor agriculture technology said in a news release.
The remaining $70 million can be drawn at $35 million increments depending on certain conditions.
The note, which matures in March 2026, carries a favorable annual interest rate of 6.75% but includes stock warrants that will be issued to the lender.
Warrants can be exercised at $6.75 each, which is equivalent to 110% of Agrify’s stock closing price on the day before the definitive agreement.
The warrants, which have a term of 5.5 years, are potentially exercisable for a number of shares equal to 65% of the funding amount, divided by the closing stock price on the trading day before the definitive agreement.
The agreement also requires Agrify to:
- Pay the interest on the loan in cash on a quarterly basis for the first year.
- Make payments equal to 4% of the original principal on a monthly basis starting in February 2023.
Alliance Global Partners is the placement agent for the financing.
Agrify produces hardware and software for use in cannabis cultivation and other crops.
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Agrify shares trade as AGFY on the Nasdaq exchange.
As of midday Monday, the stock was trading at roughly $5.50, down 10% for the day.