Quarterly report pursuant to Section 13 or 15(d)

DEBT

v3.22.2.2
DEBT
 9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
DEBT
 10. DEBT
The components of the Company’s debt are as follows:
Effective Interest Rate Maturity Date September 30, 2022 December 31, 2021
Principal amounts:
Senior Notes 38% January 2023 $ 74,935  $ 75,193 
Acquisition Facility 14% October 2026 65,000  40,000 
Acquisition-related promissory notes payable
8% - 23%
November 2022 - April 2027
 59,628  25,767 
Other debt (1)
7% - 12%
March 2022 - July 2050
 16,639  11,728 
Total debt - principal amounts $ 216,202  $ 152,688 
Less: debt issuance costs and original issue discounts (16,303) (23,536)
Total debt - carrying amounts $ 199,899  $ 129,152 
Debt - current portion $ 137,967  $ 6,181 
Debt - non-current portion $ 61,932  $ 122,971 
(1) Includes Jushi Europe debt. Refer to Note 16 - Non-Controlling Interests.
As of September 30, 2022, aggregate future contractual maturities of the Company’s debt are as follows:
Remainder of the year 2023 2024 2025 2026 Thereafter Total
Senior Notes $ —  $ 74,935  $ —  $ —  $ —  $ —  $ 74,935 
Acquisition Facility —  —  4,875  6,500  53,625  —  65,000 
Acquisition-related promissory notes payable (1)
2,411  3,449  22,385  1,970  6,971  22,442  59,628 
Other debt 3,831  588  116  125  132  11,847  16,639 
Total $ 6,242  $ 78,972  $ 27,376  $ 8,595  $ 60,728  $ 34,289  $ 216,202 
(1) The Promissory Note that matures in 2022 is a mandatorily convertible note, and the Company issued 910,000 SVS on November 21, 2022 to settle the outstanding balance.
Interest expense, net is comprised of the following:
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Interest and accretion - Senior Notes $ 6,779  $ 4,673  $ 18,015  $ 14,244 
Interest - Finance lease liabilities 2,754  2,516  8,668  6,203 
Interest and accretion - Promissory notes 1,709  418  3,794  1,033 
Interest and accretion - Acquisition Facility 1,918  —  5,212  — 
Interest and accretion - Other debt 266  117  885  370 
Capitalized interest (124) (222) (2,171) (461)
Total interest expense $ 13,302  $ 7,502  $ 34,403  $ 21,389 
Interest income (191) (60) (229) (244)
Total interest expense, net $ 13,111  $ 7,442  $ 34,174  $ 21,145 
Other Debt

PAMS Sale-leaseback Transactions
During 2021, the Company acquired land and buildings that are adjacent to the Company’s Pennsylvania Medical Solutions, LLC (“PAMS”) cultivation facility in order to expand the facility. In February 2022, the Company then closed on the sale of such land and buildings for $3,265 to the landlord of the Company’s cultivation facility. Also, in February 2022, the Company entered into a sale-leaseback agreement with the landlord. The Company concluded that control, including the significant risks and rewards of ownership, did not transfer to the buyer-lessor at the inception of the sale-leaseback transaction. Accordingly, the transaction did not meet the accounting criteria for a successful sale-leaseback transaction and therefore represents a financing obligation with a lease term ending in April 2048. As a result, the Company recognized a liability of $3,265, which will be amortized as a reduction of rental expense over the term of the failed lease using an incremental borrowing rate of 11.6%.
Dickson Facility
In July 2022, the Company entered into a $2,800 credit facility with a bank to fund the construction of a dispensary in Dickson City, Pennsylvania. As of September 30, 2022, the Company had drawn down $1,050, and during October 2022, the Company drew down the remaining balance of $1,750. This credit facility, which matures on July 18, 2027, bear interest at a variable rate equal to prime rate plus 2%. The interest rate as of September 30, 2022 was 7.5%.
Unsecured Promissory Notes

Apothecarium
In March 2022, in connection with the Apothecarium acquisition, the Company issued to the seller two unsecured promissory notes with a total principal amount of $9,853, with no stated interest and both maturing in March 2027. The promissory notes provide for a principal payment of $3,448 on the 21st month anniversary, followed by 39 equal monthly payments for the remaining balance.
NuLeaf
In April 2022, in connection with the NuLeaf acquisition, the Company issued to the seller unsecured promissory notes with an aggregate total principal amount of $15,750 with a stated interest rate of 8% and maturity date in April 2027. The promissory notes provide for a full principal payment on the maturity date. Additionally, in July 2022, the Company amended the five-year note for an additional principal amount of $3,000 to settle the contingent consideration associated with the acquisition. There were no changes to the interest rate and maturity date of the five-year note at such time.

Nature’s Remedy
In September 2022, the Company amended the three-year note for an additional principal amount of $5,000 in settlement of a contingent consideration liability for the First Milestone Period in connection with the September 2021 acquisition of Nature’s Remedy. Refer to Note 7 - Acquisitions for more information.

Amendments to the Acquisition Facility
In April 2022, the Company entered into an amendment to the Acquisition Facility pursuant to which: (i) the commencement of leverage testing was pushed back by four quarters (now beginning March 31, 2023 as reflected in the table below), (ii) certain leverage ratios were revised; and (iii) the Company may proceed with a reorganization pursuant to a petition for bankruptcy in Switzerland with respect to Jushi Europe without potentially defaulting under the Acquisition Facility. Refer to Note 16 - Non-Controlling Interests for additional information on Jushi Europe.
Total Leverage Ratio, calculated as the ratio of Total Funded Indebtedness to EBITDAR (all such terms are defined in the Acquisition Facility agreement) not to exceed the correlative ratio below:
Applicable Ratio Fiscal Quarter Ending
6.00 to 1.00
 March 31, 2023
5.00 to 1.00
 June 30, 2023
4.00 to 1.00
 September 30 and December 31, 2023
3.50 to 1.00
 March 31, 2024 and all fiscal quarters ending thereafter
Additionally, in April 2022, the Company drew down $25,000 from the Acquisition Facility to fund the cash portions of the NuLeaf and Apothecarium acquisitions.
As part of the refinancing of the Senior Notes, the Company is currently renegotiating the terms of the financial covenants under the Acquisition Facility, including the removal of the Total Leverage Ratio requirement. The Company expects to complete the renegotiations by the end of 2022.