2022-08-19 | NDAQ:AGFY | Press release

New terms provide the company with additional flexibility to pursue long-term growth initiatives

BILLERICA, Mass., Aug. 19, 2022 (GLOBE NEWSWIRE) — Agrify Corporation (Nasdaq: AGFY) (“Agrify” or the “Company”), a leading provider of innovative cultivation and extraction solutions for the cannabis industry , announced today that it has signed a definitive agreement with its institutional lender to successfully amend its existing credit facility.

“Given the current difficult operating environment in the cannabis industry, it is imperative for us to align our strategy, resources and execution plan with new market realities,” said Raymond Chang, CEO of Agrify. “The modification of our credit facility has been a top priority for us, and we are pleased to be able to move forward with additional flexibility to manage our business, conserve liquidity and pursue a variety of attractive growth opportunities with As part of this transaction, we will refund a portion of the outstanding balance on the original note, exchange the remaining balance on the original note for a new note with a significantly reduced principal balance, and remove or modify certain financial covenants. new note will have no required amortization payments on the principal balance for three years and an option from the Company for early redemption All of these changes should make it easier for us to navigate these turbulent times as we hope to bounce back strongly after the temporary challenges facing the entire industry. ie.”

Terms of trade

Pursuant to the Amendment, Agrify will partially prepay the senior secured note (the “original note”) originally issued to the lender (the “Lender”) in March 2022 (the “previous closing”) and exchange the balance remainder of the original note. for (i) a new senior secured note (the “Note”) in an initial principal amount of $35.0 million and (ii) a new warrant to purchase 14,227,643 common shares ( the “Note Exchange Warrant”). In addition, Agrify will exchange the warrant to purchase 6,881,108 common shares issued at the prior closing for a new warrant with the same number of underlying shares but with a reduced exercise price (the “warrant Warrant Exchange Subscription””).

The note will mature on the third anniversary of its issuance (the “Maturity Date””) and will bear an annualized interest rate of 9.0%, with interest payable monthly, in cash, beginning September 1 2022. The principal amount of the note will be payable on the maturity date, provided that the lender is entitled to a cash sweep of 20% of the proceeds received by Agrify under any equity financing, which will reduce the principal amount outstanding on the note.

At any time, Agrify may prepay the entire Note by redemption at a price equal to 102.5% of the principal amount then outstanding under the Note, plus accrued but unpaid interest. The Lender will also have the option of requiring Agrify to repay the Note (i) on one-year or two-year issue anniversaries at a price equal to the principal amount then unpaid on the Note plus accrued interest but unpaid or (ii) if Agrify suffers a fundamental change at a price equal to 102.5% of the principal amount then unpaid under the note, plus accrued but unpaid interest.

The rating will impose certain customary affirmative and negative covenants on Agrify, but will not include the revenue or EBITDA covenants included in the original rating. In addition, if an Event of Default under the Note occurs, the Lender may elect to repay the Note for cash equal to 115% of the then outstanding principal amount of the Note (or such lesser principal amount accelerated by the Lender) plus accrued and unpaid interest.

Until the date the note is fully repaid, the lender shall, subject to certain exceptions, be entitled to participate in up to 30% of any debt, preferred stock or equity financing of Agrify or its subsidiaries.

The exchange warrant will have an exercise price of $2.15 per share, will be exercisable beginning on the sixth month anniversary of issuance and will expire five years and six months after issuance. The Note Exchange Warrant will have an exercise price of $1.23 per share, will be exercisable upon issuance and will expire five years and six months after issuance. Until the company completes a qualified equity financing of at least $15.0 million, the exercise price of the note exchange warrant will be reduced to the extent that Agrify issues securities at a price of inferior purchase. The Note Exchange Warrant will also prohibit Agrify, until the completion of such qualified equity financing, from issuing Warrants with more favorable or preferential terms and/or terms.

The Warrant Exchange Warrant and the Note Exchange Warrant will include a limitation such that the beneficial ownership of the lender will not exceed 4.99% of the outstanding common shares of Agrify at the time of exercise (this percentage which may be reduced or increased by the Lender subject to the terms of the subscription warrants but which may not exceed 9.99%). In addition, the Lender may not exercise the Warrant Exchange Warrant and/or the Note Exchange Warrant for more than 5,308,578 Common Shares unless and until the shareholder approval is obtained, which the Company has agreed to use all reasonable efforts to obtain such shareholder approval at the next meeting of shareholders of the Company, but in no event later than June 30, 2023.

The securities to be issued to the lender will not be registered under the Securities Act of 1933, as amended, or state securities laws and may not be offered or sold in the United States absent registration with of the SEC or an applicable exemption from these registration requirements. . The definitive exchange agreement requires Agrify to file a resale registration statement with respect to the shares underlying the Warrant Exchange Warrant and the Note Exchange Warrant as soon as practicable and in good condition. cause within 45 days of the initial closing.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities that are the subject of the offer. There will be no sale of the securities described herein in any state or jurisdiction in which such offer, sale or solicitation would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.

About Agfy (Nasdaq:AGFY)

Agrify is a leading provider of innovative cultivation and extraction solutions for the cannabis industry, bringing data, science and technology to the forefront of the market. Our micro-environmentally controlled Vertical Farm Units (VFUs) allow growers to produce the highest quality produce with unmatched consistency, yield and return on investment at scale. Our comprehensive line of extraction products, which includes hydrocarbon, ethanol, solventless, post-processing and laboratory equipment, enables producers to maximize the quantity and quality of extract required for concentrates of superior quality. For more information, please visit Agrify at http://www.agrify.com.

Forward-looking statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding Agrify and other matters. All statements in this press release that do not relate to historical facts should be considered forward-looking statements, including, without limitation, Agrify’s ability to provide solutions and services, satisfaction of closing conditions and the ability to close in accordance with the exchange agreement, the expected benefits of the credit facility amendment, Agrify’s future business and financial prospects, and the duration and severity of the challenges facing the industry in which Agrify operates. In some instances, you can identify forward-looking statements by words such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “could”, ” intends”, “aims”, “plans”, “intends”, “believes”, “estimates”, “predicts”, “potential” or “continues” or the negative form of these terms or other expressions The forward-looking statements contained in this press release are only predictions. We have based these forward-looking statements largely on our current expectations and projections regarding future events and financial trends that we believe may affect our business, our financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to differ materially from the results, performance or such or future achievements expressed or implied by the forward-looking statements. You should carefully consider the risks and uncertainties affecting our business, including those described in our filings with the Securities and Exchange Commission (“SEC”), including under the heading “Risk Factors” in our annual report on Form 10-K filed for the fiscal year ended December 31, 2021 with the SEC, which may be obtained on the SEC’s website at www.sec.gov. These forward-looking statements speak only as of the date of this communication. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are, however, advised to review any other disclosures we make on related matters in our public announcements and our filings with the SEC.

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