Cannabis multistate operator Ayr Wellness has announced significant changes to its corporate debt structure, including extending its senior notes’ maturity date and securing a commitment for additional debt financing. The targeted amendments aim to strengthen the company’s financial position and increase cash flow in the near term.
Senior Notes Maturity Date Extended Until December 2026
To further solidify its financial standing, Ayr Wellness is extending the maturity date of its senior notes due in December 2024 by two years. This move has received support from approximately 75% of the noteholders, underlining their confidence in the company’s growth prospects.
As part of this deal, Ayr will issue new shares worth 24.9% of the company’s post-closing share total, excluding existing warrants and “new anti-dilutive warrants” issued by Ayr. Additionally, the noteholders who backed the extension will have the opportunity to participate in the issuance of new 13% senior notes up to $50 million at a 20% original issue discount. This could generate $40 million in cash for Ayr if fully funded.
Backstop Premium to Ensure New Money Notes Issuance
One noteholder will act as a backstop to facilitate the successful issuance of these new money notes, guaranteeing the necessary funds. In return, they will receive a backstop premium payable in shares equivalent to 5.1% of Ayr’s outstanding shares.
The proceeds generated from these new money notes are expected to be used for two primary purposes – restructuring or repaying existing senior notes and providing working capital to the company.
Ayr Wellness Amends Agreement with LivFree Wellness
As part of its overall debt restructure, Ayr has also amended a promissory note with Nevada-based cannabis retailer LivFree Wellness, which it acquired in a qualifying transaction in 2019. According to these chances, a $3 million principal payment will be made by Ayr. The remaining $17 million principal and $5 million accrued paid-in-kind interest will be deferred for a period of two years.
Anti-dilutive Warrants Issued to Minimize Shareholder Dilution
Ayr will provide anti-dilutive warrants to minimize the dilution effect on existing shareholders due to new share issuance and backstop premiums. These warrants will allow the current shareholders to acquire up to 16.5% of the company’s outstanding shares, including the newly issued shares and backstop premium.
Ayr Wellness: A Growing Force in the Cannabis Industry
Ayr Wellness is gaining momentum in consolidating its position in the highly competitive cannabis industry thanks to its robust acquisition strategy and focus on operational excellence. The recent amendments to its corporate debt are aimed at enhancing the company’s financial health, allowing it to stay agile and proactive in pursuing growth opportunities.
Favorable Regulatory Environment Boosts Prospects
Thanks to an increasingly favorable regulatory environment in the United States, more states are legalizing both medical and recreational cannabis use. As a result, the industry presents immense profit potential for established players like Ayr Wellness. Additionally, the federal push towards cannabis legalization further bolsters the prospects for multistate operators like Ayr.
Ayr Wellness Poised for Continued Success
With the recently announced changes to its debt structure and strong industry tailwinds, Ayr Wellness is well-positioned for sustainable growth in the expanding cannabis market. Extending the senior notes’ maturity date, securing additional debt financing commitment, and issuing anti-dilutive warrants to existing shareholders showcase the company’s commitment to preserving shareholder value while seizing market opportunities.
In conclusion, Ayr Wellness’ proactive approach toward amending its debt structure is expected to yield positive financial stability and cash flow improvement results. This move will help the company effectively compete in a rapidly evolving industry landscape, creating sustained value for its shareholders in the long run.