AYR Wellness begins major business restructuring

AYR Wellness has taken the first formal step in a significant restructuring of its business.

The company has begun transferring its Virginia cannabis operations to a new entity called Arboretum Virginia LLC, which is owned by Arboretum Bidco LLC. Arboretum was set up by AYR's senior lenders — the financial institutions that hold the company's secured debt — and will operate under the name "Ayr Wellness." The transfer of operations in other U.S. states is expected to follow as each state's cannabis regulators grant the necessary approvals.

As part of the restructuring, a new $275 million secured loan has been established and initially funded. The loan is backed by Millstreet Capital Management LLC, with other senior lenders also able to participate. It carries an interest rate of 13% per year. For the first two years, interest can be added to the loan balance rather than paid in cash, after which it must be paid in cash. The loan runs for five years from the initial funding date and is secured against substantially all of Arboretum's assets. Existing debt that AYR held under a previous short-term loan arrangement is being rolled into this new facility.

As each state's operations are transferred, AYR's existing lenders are receiving ownership stakes in Arboretum Investments LLC, the top-level parent company of the new Arboretum structure, in exchange for cancelling portions of AYR's outstanding debt. In Virginia's case, this initial transfer has already been completed. The same process will repeat for each remaining state as regulatory approvals come through. The restructuring is expected to significantly reduce AYR's debt load and improve the financial health of the new Arboretum business going forward.

Separately, AYR Wellness as a corporate entity is continuing a court-supervised wind-down process in the Supreme Court of British Columbia, Canada, under Canadian insolvency law. This process will lead to the eventual liquidation of the remaining AYR company.