Agrify Corporation (NASDAQ: AGFY) announced on Monday that CP Acquisition LLC and its existing institutional lender have signed a definitive agreement under which CP Acquisition purchased all of the outstanding convertible and senior secured notes of Agrify held by the existing lender and plans to participate in a future equity raise to inject new capital into the company.
Raymond Chang, the CEO of Agrify Corporation, is one of the principals of CP Acquisition.
Prior to the note purchase closing, the existing institutional lender converted $3 million in principal amount outstanding under the senior secured note due 2025 issued by Agrify to the existing lender on August 19, 2022, plus $1.1 million accrued interest, to warrants to purchase 2,809,669 shares of Agrify common stock at a conversion rate equal to the minimum price pursuant to Nasdaq listing rules, along with the exchange of the right to receive 375,629 shares held in abeyance under a prior exchange agreement for the same number of warrants. The warrants have an exercise price of $0.001 per share.
CP Acquisition purchased all remaining outstanding convertible notes and senior secured notes held by the existing lender, with an aggregate principal amount of roughly $8.84 million outstanding under the convertible note initially issued to the existing lender in March 2023 and an aggregate principal amount of approximately $6.67 million outstanding under the August 2022 senior secured note.
Following the note purchase closing, subject to shareholder approval, CP Acquisition plans to convert the remaining balance of the March 2023 convertible note to common stock and to amend the applicable conversion price and purchase for cash or convertible debt no less than $3 million of common stock.
Subsequent to the note purchase closing, subject to shareholder approval, CP Acquisition and Agrify intend to amend and restate the senior secured note originally issued in August 2022 to grant CP Acquisition the right to convert that senior secured note, in whole or in part, to common stock.
CP Acquisition agreed to waive any events of default under the acquired notes until December 31, 2023, and to enter into an agreement with Agrify to extend the maturity date of the acquired notes until December 31, 2025.
Why It Matters
Chang said the debt reduction, along with an extended maturity of the outstanding debt and potential for future injections of capital, position Agrify to “rebound and reestablish itself as the preeminent solution provider for the cannabis industry.”
“We are also seeing really encouraging yield and performance results using our proprietary vertical farming units from our newly turned-on customer facilities and, with these successful model facilities, are continuing to gain interest and have signed up several new cultivation facilities to use our equipment,” Chang explained. “On the extraction side of the business, our comprehensive solution offerings and new products continue to gain interest both domestically and internationally.”
AGFY Price Action
Agrify’s shares traded 0.73% lower at $1.36 per share during the pre-market session on Tuesday morning.
Photo: Courtesy of Towfiqu barbhuiya on Unsplash
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