Estimated reading time: 6 minutes
Key Takeaways
- AYR Wellness has secured a *$50 million* senior secured bridge credit agreement to shore up liquidity.
- Funding arrives at a critical juncture, with over $900 million in liabilities and looming maturities.
- Two tranches prioritise *operations* and potential *wind-down* scenarios.
- High interest and layered premiums raise the stakes for swift asset sales.
- Stakeholders must weigh either a revitalised “NewCo” or an *orderly exit*.
Table of Contents
Who Is AYR Wellness?
AYR Wellness is a *multi-state cannabis operator* navigating mounting financial pressure. The company faces:
- More than $900 million in total liabilities
- $358 million of debt maturing by 2026
- Falling market valuations
- Persistent regulatory hurdles
*Against this backdrop, the newly signed bridge facility offers much-needed breathing room—but at a cost.*
The Bridge Credit Agreement
The multiple-draw term loan provides up to $50 million split into two distinct tranches:
Tranche A
- Funds daily operations
- Supports general corporate purposes
- Covers asset-sale expenses
- Pays restructuring advisers
Tranche B
- Reserved for a *court-supervised wind-down* of non-core assets
- Ensures an orderly disposal of activities outside the long-term plan
Key Terms & Conditions
Cost of capital is steep, underscoring the urgency of a successful restructuring:
- 14 % annual interest, paid-in-kind
- 10 % commitment premium
- 10 % exit premium
- 15 % backstop premium
- First-priority liens on present and future assets
“The loan seamlessly rolls into a take-back facility under *NewCo*, granting lenders repayment or equity upside.”
Why the Bridge Facility Matters
The funding buys time for management to execute its plan:
- Maintains working capital and business continuity
- Covers legal and advisory fees tied to restructuring
- Facilitates asset sales across six states
Implications for the Restructuring Plan
Formation of *NewCo* reshapes the capital stack:
- Senior creditors swap debt for equity in NewCo
- Unsecured creditors fall lower in recovery priority
- Existing shareholders face dilution risk
Effects on Operations & Stakeholders
*Day-to-day operations* continue under stricter financial discipline, yet:
- Higher interest outflows strain cash
- Employees may confront re-alignments
- Suppliers watch credit terms closely
Future Outlook
Base-case scenario: asset sales close on time, NewCo launches, and operations stabilise.
Downside risk: sluggish sales could trigger an orderly wind-down and lower recoveries.
Industry headwinds—tight regulation, market volatility, and intense competition—remain ever-present.
Practical Steps for Stakeholders
Investors
- Track court filings and asset-sale updates
- Model dilution scenarios
Employees
- Stay informed on internal communications
- Plan for potential role shifts
Business Partners
- Review contract protections
- Confirm payment schedules
Closing Thoughts
The bridge loan grants AYR Wellness a *narrow window* to execute flawlessly. If management nails asset sales, revitalisation via NewCo could unlock future upside. Should momentum falter, an orderly exit looms. Either way, *vigilance* and *disciplined execution* are non-negotiable.
FAQs
What is a bridge credit agreement?
A bridge credit agreement is a short-term loan that provides interim financing until a company secures long-term funding or completes asset sales.
Why did AYR Wellness choose the bridge facility now?
With tight liquidity and significant debt maturities ahead, the bridge loan offers immediate cash to keep operations running while restructuring unfolds.
How does the interest structure impact cash flow?
Interest is paid-in-kind, meaning it accrues to the loan balance. While this defers cash payments, the overall debt load grows, adding future pressure.
What happens if asset sales fall short?
If proceeds disappoint, Tranche B funds an orderly wind-down of non-core assets, potentially leading to an exit from certain markets or a full liquidation.
Will existing shareholders be diluted?
Yes. Senior creditors may convert debt into equity in NewCo, reducing the ownership percentage of current shareholders.
