Trees Corporation on June 20, 2025 entered into a restructuring arrangement with TCM Tactical Opportunities Fund II LP and other senior debt holders. Pursuant to the Restructuring, the Company entered into a new Refinancing Agreement relating to the original notes (as issued to Lead Investor and Purchasers pursuant to notes dated on or about September 16, 2022, as amended on December 15, 2023; the ?Original Notes? and ?Original Note Offering?).
The Refinancing Agreement: Provides for the issuance of a new First Seniority Secured Promissory Note with the Lead Investor (First Senior Note) and Third Party First Senior Notes with the Purchasers (Third Party First Senior Notes); Provides for Amended and Restated Original Notes with Lead Investor and the Purchasers; Cancels various working capital and M&A notes issued by the Company to Lead Investor (Working Capital Notes); Provides for enhanced Company covenants including certain financial covenants relating to maintaining minimum cash (negative $550,000) as well as payments to Lead Investor and Purchasers if and when available cash equals 1.5mm or greater. As part of the Restructuring, the Company and Lead Investor entered into the First Senior Note dated the Effective Date in the principal amount of $6.749 million representing the principal balance of the Working Capital Notes, various deferred and default interest; and certain associated costs. The First Senior Note matures on March 15, 2026; any interest that accrues thereafter bears an 18% interest rate.
The outstanding amount entitles Lead Investor to a two (2) times liquidation preference upon the earlier of maturity, an event of default, or a liquidity event. In addition, the Company issued new Third Party First Senior Notes to each Purchaser with terms substantially similar to those contained in the First Senior Note. The principal amount under the First Senior Note is senior to all other existing debt of the Company, except with respect to the Third Party First Senior Notes, for which the principal amount is parri passu with respect to the principal amount(s) of the Purchasers.
Further, the Company, Lead Investor, and Purchasers entered into Amended and Restated Original Notes pursuant to which interest accrues from the period of March 15, 2026 to the maturity date of September 15, 2026; with interest payable quarterly in arrears beginning June 15, 2026. All conversion features previously contained in the Original Notes were removed in their entirety. In addition, as of the Effective Date, the Company and Lead Investor amended the original Securities Purchase Agreement and Security Agreement (as such terms are defined in the Original Note Offering).
