The board of directors for Agrify Corp. (Nasdaq: AGFY) approved a $20 million convertible secured note, of which $10 million will be drawn upon at closing, from a wholly-owned subsidiary of Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF).

Before this financing, the Green Thumb subsidiary acquired an ownership stake in Agrify through the purchase of common stock and warrants from its outgoing Chairman and CEO Raymond Chang and outgoing Director I-Tseng Jenny Chan, the company said.

Kovler takes over

As part of the deal, Chang resigned as chairman and CEO and Chan stepped down from the board.

GTI’s CEO Benjamin Kovler, Richard Drexler and Armon Vakili were named to replace the outgoing directors, bringing the total board membership to six, the majority of whom are independent. Kovler was also appointed to the roles of Agrify’s chairman and interim CEO following Chang’s resignation.

“We believe Green Thumb’s financial investment and the new Directors’ experience can help Agrify unlock its untapped potential,” Kovler said. “… Given Green Thumb’s thoughtful and prudent approach to capital allocation, we see significant opportunity ahead to assist in the creation of value for shareholders via Agrify’s non-plant touching assets.”

Kovler recently announced that he had received an award of 750,000 shares of restricted GTI stock and a $300,000 cash bonus. The board also increased Kovler’s annual cash bonus targets from 250% of his base salary to 325%. With GTI stock trading at roughly $10.68, the stock bonus is worth approximately $8 million.

Drexler has more than 40 years of experience in corporate leadership roles as well as serving on several public company boards and audit committees. Vakili currently serves as vice president of strategic initiatives and partnerships at Green Thumb and has more than a decade of experience in corporate affairs, mergers and acquisitions, private equity and finance.

Troubled company

Agrify has been a troubled company, and as of June 30, it had approximately $100,000 of cash, cash equivalents and restricted cash. At the end of 2023, it had an accumulated deficit of approximately $265.8 million.

The company has also been fighting to retain its share listing on the Nasdaq exchange, including engaging in a 1-for-15 reverse stock split in October.

Social media chatter has speculated that GTI could be angling itself for a Nasdaq listing by engaging in this transaction. The company hinted at major stock exchange aspirations with its previous conversations around a potential deal with The Boston Beer Company (NYSE: SAMS).