Hydrofarm Eliminates $109 Million Term Loan Through Recapitalization

Hydrofarm Holdings Group, Inc. retired its $109 million term loan through a completed recapitalization, reducing annual debt service by about $12 million and leaving only immaterial debt at a foreign subsidiary.

The restructuring left the former lenders with 27.5 million newly issued Series 1 non-voting convertible preferred shares. The shares are convertible into common stock at $1 per share at each holder’s option, subject to stockholder approval; the lenders also received warrants covering 27.5 million common shares, with a 78-cent exercise price and stockholder approval required before exercise.

Hydrofarm raised about $8.3 million in gross proceeds through a registered direct offering and a concurrent private placement. About 41.8 million common shares are expected to be outstanding after the offering and conversion of the preferred stock.

The company plans to seek stockholder approval for the conversion and warrant exercise. Its remaining debt consists of an immaterial amount tied to a foreign subsidiary’s revolving credit line and mortgage.