Agrify Corporation (NASDAQ:AGFY) has entered into a debt financing agreement for up to $135 million in a senior secured note facility with an institutional lender.
Transaction Details
An initial funding of $65 million under the note will be immediately available to the company at an initial closing, with the option to draw down the remaining $70 million available in two subsequent fundings of $35 million each, subject to the satisfaction of certain funding conditions.
The note will mature on March 1, 2026, and will contain a 6.75% annualized coupon to be paid quarterly, in cash, beginning February 1, 2023.
Following the one-year anniversary of the note’s issuance, the company may, in lieu of paying interest in cash, pay such interest in kind, in which case interest on the note will be calculated at the rate of 8.75% per annum and will be added to the principal amount of the Note.
At the time of the initial funding, the company will issue warrants to the lender with a term of 5.5 years, exercisable for a number of shares equal to 65% of the funding amount divided by the closing stock price on the trading day prior to the date of the definitive agreement.
The initial warrants will have an exercise price equal to $6.75, which is 110% of the closing stock price on the trading day immediately prior to the signing of the definitive agreement.
For each subsequent funding, the Company will similarly issue warrants to the lender.
Until the date the note is fully repaid, the Lender will, subject to certain exceptions, have the right to participate up to 30% of any debt, preferred stock, or equity-linked financing of the company or its subsidiaries.
The proceeds will be used for working capital and general corporate purposes.
A.G.P./Alliance Global Partners is acting as sole placement agent for the financing, and Burns & Levinson LLP is acting as the Company’s legal counsel.
Management Commentary
“We continue to see tremendous interest and enthusiasm around the Agrify Total Turn-Key (TTK) Solution program, which is the key driver behind us having over $500 million in carefully vetted sales opportunities in our total qualified pipeline,” Raymond Chang, chairman and CEO of Agrify, said. “This debt facility further validates our TTK program and offers us the immediate balance sheet leverage to fund our continued growth. As we establish additional TTK partnerships, we believe our high-margin recurring production and SaaS revenue streams will provide us with increased financial leverage, allowing us to create more meaningful, long-term value for our shareholders.”
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