Ayr Wellness Faces Drastic Restructuring as Noteholders Take Control

LOS ANGELES – Ayr Wellness Inc., a prominent player in the U.S. Cannabis industry, is set to undergo a seismic restructuring that could mark the end of the company as it exists today. On July 30, Ayr announced a Restructuring Support Agreement (RSA) that hands significant control to its senior secured noteholders. The move signals a challenging chapter for the company, with implications for the broader Cannabis sector.

Under the RSA, Ayr will support an Article 9 UCC sales process initiated by its noteholders, who will use credit bids to acquire the company’s assets in Florida, Ohio, Pennsylvania, Nevada, New Jersey, and Virginia. In exchange for canceling the credit bid portion of their senior notes, noteholders will receive 100% of the new equity in the restructured entity. Any remaining senior notes will be partially satisfied through cash distributions from the sale of Ayr’s Massachusetts and Illinois properties.

The process, backed by an Ad Hoc Committee representing a supermajority of noteholders, includes a $50 million senior secured bridge loan to keep operations afloat during the sales process. Unlike a traditional debt-for-equity swap, the credit bid structure allows noteholders to bid their debt at face value [despite its market value hovering at roughly 50% of par], giving them a distinct advantage over cash bidders.

This restructuring paints a stark picture for Ayr’s existing shareholders, whose equity is likely to be wiped out entirely. The company will be fragmented, with assets divvied up among creditors or third-party bidders. “The AYR we know today will cease to exist,” Viridian noted, describing the outcome as “more draconian” than anticipated alternatives like a partial debt-for-equity swap.

The decision to pursue this path reflects the noteholders’ reluctance to own Ayr’s assets outright, yet their credit bid capability ensures competitive bidding. For the Cannabis industry, Ayr’s unraveling underscores the financial pressures facing even established operators in a market constrained by regulatory hurdles and capital scarcity.

As Ayr’s assets are carved up, the restructuring serves as a sobering reminder: in an industry fueled by optimism, fiscal discipline remains paramount. The fallout from Ayr’s collapse will ripple through the sector, urging companies to reassess their balance sheets before creditors call the shots.

Source: Viridian Capital Advisors