Item 1.01 Entry into a Material Definitive Agreement.
On December 22, 2022, Hydrofarm Holdings Group, Inc. (the "Company") and certain
of its subsidiaries entered into an amendment (the "Fourth Amendment") to that
certain Senior Secured Revolving Credit Facility (the "Revolving Credit
Facility") with JPMorgan Chase Bank, N.A., as administrative agent, issuing bank
and swingline lender, and the lenders from time to time party thereto. The
Fourth Amendment permits the Sale-Leaseback Transaction referenced in Item 8.01
below and waived any mandatory prepayment from the proceeds thereof, reduced the
maximum commitment amount under the Revolving Credit Facility from $100 million
to $75 million, and made certain other changes. As of September 30, 2022, the
Company's borrowing base assets supported availability of approximately $62
million under the Revolving Credit Facility, well below the previous maximum
commitment amount of $100 million. Accordingly, the Company does not expect the
reduction of the maximum commitment amount to $75 million under the Fourth
Amendment to have any material immediate impact on its overall liquidity
position. Furthermore, as of December 22, 2022, the Company had no borrowings
under the Revolving Credit Facility.
The foregoing description of the Fourth Amendment does not purport to be
complete and is qualified in its entirety by reference to the provisions of the
Fourth Amendment, a copy of which is filed as Exhibit 10.1 to this Current
Report on Form 8-K and is incorporated herein by reference.
Item 8.01 Other Events.
Effective as of December 21, 2022, Gotham Properties LLC, an Oregon limited
liability company and a subsidiary of the Company ("Seller"), entered into a
Purchase and Sale Agreement with J & D Property, LLC, a Nevada limited liability
company ("Purchaser") pursuant to which certain real property located in the
City of Eugene, County of Lane, State of Oregon (the "Eugene Property") will be
sold to Purchaser for approximately $8.6 million and then leased back by Seller
(the "Sale-Leaseback Transaction"). The Eugene Property serves as the
manufacturing and processing site for certain of the Company's grow media and
nutrient brands. The Sale-Leaseback Transaction is expected to be consummated
before the end of January 2023, subject to customary closing conditions. The
Company intends to reinvest the net proceeds from the Sale-Leaseback Transaction
into certain permitted investments, such as capital expenditures, which are
expected to primarily support growth and productivity programs in 2023.
This Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the Private Securities Litigation Reform Act of 1995. These statements include
statements made about the Company's liquidity and the use of proceeds from the
Sale-Leaseback Transaction described above. Such statements are based on current
assumptions that involve risks and uncertainties that could cause actual
outcomes and results to differ materially. These risks and uncertainties, many
of which are beyond the Company's control, include risks described in the
section entitled "Risk Factors" and elsewhere in the Company's Annual Report on
Form 10-K filing made with the SEC on March 1, 2022 and the Company's other
Exchange Act filings. These forward-looking statements speak only as of the date
hereof and should not be unduly relied upon. The Company disclaims any
obligation to update these forward-looking statements. All forward-looking
statements in this document are qualified in their entirety by this cautionary
statement.
Item 9.01 Financial Statements and Exhibits.
Exhibit
No. Description
10.1 Fourth Amendment to Credit Agreement and Limited Consent and Waiver,
dated December 22, 2022, by and among Hydrofarm Holdings Group, Inc.,
Hydrofarm, LLC, Field 16, LLC, Aurora Innovations, LLC, Innovative
Growers Equipment, Inc., Manufacturing & Supply Chain Services, Inc.,
Hydrofarm Investment Corp., Hydrofarm Holdings LLC, EHH Holdings, LLC,
Sunblaster LLC, Hydrofarm Canada, LLC, Sunblaster Holdings ULC, Eddi's
Wholesale Garden Supplies Ltd., House & Garden Holdings, LLC, Gotham
Properties LLC, Aurora International, LLC, Aurora Peat Products ULC,
Greenstar Plant Products Inc., Innovative Ag Installation, Inc.,
Innovative Racking Systems, Inc., Innovative Shipping Solutions, Inc.,
Innovative Growers Equipment Canada, Inc., JPMorgan Chase Bank, N.A.
and JPMorgan Chase Bank, N.A.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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