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.
The company went public in January 2021 and has raised additional capital and made acquisitions since.
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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.