AYR Wellness Inc. AYR AYRWF announced it has reached an agreement with Elk Spring Partners, LLC and other selling security holders (collectively known as the “NJ Counterparties”).
The agreement aims to amend the earn-out payment terms specified in the membership interest purchase agreement (MIPA) related to AYR’s acquisition of GSD NJ, LLC, a NJ-based company.
The terms and conditions for the earn-out payments outlined in the membership interest purchase agreement (MIPA) have been amended as described below:
- The first portion of the earn-out, amounting to US$10 million, will be paid in cash by May 19, 2023.
- The next portion of the earn-out, worth US$14 million, will be satisfied by issuing promissory notes with a 13.5% interest rate. The notes will have monthly interest-only payments until May 2024, followed by a 1% monthly amortization until December 2026. The promissory notes are expected to be issued by May 19, 2023.
- The remaining portion of the earn-out, with a potential maximum amount of US$72.75 million based on GSD’s sales, will be satisfied in two ways: Issuing approximately 3,797,468 subordinate voting shares (SVS) or exchangeable shares of CSAC Acquisition NJ Corp., exchangeable for SVS at the holder’s discretion, at a price of US$0.79 per SVS by May 19, 2023. And, making a cash payment of approximately US$10.2 million to the NJ Counterparties at a future time, based on negotiations with other debtholders. “This amendment results in a substantial reduction of dilution to the Company’s shareholders,” per a press release.
In addition, AYR made several announcements regarding amendments and engagements:
AYR reached an agreement with Green Partners Investor LLC and other selling security holders (collectively known as the “Sira Counterparties”) to amend the payment terms under the equity exchange agreement (EEA) related to the acquisition of Sira Naturals Inc. in Massachusetts.
The cash payment of US$27.5 million, initially expected by May 1, 2024, will now be paid either ten days after the maturity date of AYR’s 12.5% senior notes due December 10, 2024, or by May 1, 2026, but no later than December 10, 2026.
The unpaid portions of the EEA earn-outs will accrue 6% interest per annum with 10% annual amortization. This amendment delays a significant portion of the earn-out payment until at least May 2026, preserving cash on the balance sheet.
Price action: On Friday afternoon, AYRWF shares were trading at $0.9172, experiencing an increase of 8.13%.
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