Quarterly report pursuant to Section 13 or 15(d)

DEBT

v3.22.2.2
DEBT
 6 Months Ended
Jun. 30, 2022
Debt Disclosure [Abstract]  
DEBT
 9. DEBT
The components of the Company’s debt are as follows:
Effective Interest Rate Maturity Date June 30, 2022 December 31, 2021
Principal amounts:
Senior Notes 37% January 2023 $ 74,935  $ 75,193 
Acquisition Facility 14% October 2026 65,000  40,000 
Acquisition-related promissory notes payable
7% - 24%
November 2022 - April 2027
 51,583  25,767 
Other debt (1)
6% - 12%
March 2022 - July 2050
 15,876  11,728 
Total debt - principal amounts $ 207,394  $ 152,688 
Less: debt issuance costs and original issue discounts (21,397) (23,536)
Total debt - carrying amounts $ 185,997  $ 129,152 
Debt - current portion $ 70,322  $ 6,181 
Debt - non-current portion $ 115,675  $ 122,971 
(1) Includes Jushi Europe debt. Refer to Note 15 - Non-Controlling Interests.
As of June 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)
2,412  3,448  17,385  1,971  6,970  19,397  51,583 
Other debt 4,095  589  100  107  4,616  6,369  15,876 
Total $ 6,507  $ 78,972  $ 22,360  $ 8,578  $ 65,211  $ 25,766  $ 207,394 
(1) The Promissory Note that matures in 2022 is a mandatorily convertible note that will be settled in 910,000 SVS.
Interest expense, net is comprised of the following:
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Interest and accretion - Senior Notes $ 5,838  $ 4,371  $ 11,236  $ 9,574 
Interest - Finance lease liabilities 3,013  2,297  5,914  3,687 
Interest and accretion - Promissory notes 1,347  302  2,084  614 
Interest and accretion - Acquisition Facility 1,854  —  3,294  — 
Interest and accretion - Other debt 221  140  620  252 
Capitalized interest (1,303) (155) (2,047) (240)
Total interest expense $ 10,970  $ 6,955  $ 21,101  $ 13,887 
Interest income (23) (87) (38) (184)
Total interest expense, net $ 10,947  $ 6,868  $ 21,063  $ 13,703 
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 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%.
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.

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 15 - 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.