Quarterly report pursuant to Section 13 or 15(d)

DEBT

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DEBT
 3 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
DEBT
 9. DEBT
The components of the Company’s debt are as follows:
Effective Interest Rate Maturity Date March 31, 2024 (unaudited) December 31, 2023
Principal amounts:
Second Lien Notes 15% December 2026 $ 79,835  $ 75,497 
Acquisition Facility 15% December 2024 57,687  60,125 
Acquisition-related promissory notes payable
8% - 16%
August 2024 - April 2027
 25,864  35,716 
Mortgage loans
6% - 11%
January 2027 - April 2028
 29,424  29,456 
Total debt subject to scheduled repayments 192,810  200,794 
Promissory notes payable to Sammartino (1)
10%
September 2024 - September 2026
 21,500  21,500 
Jushi Europe debt (2)
n/a March 2022 3,225  3,298 
Total debt 217,535  225,592 
Less: debt issuance costs and original issue discounts (10,478) (13,037)
Total debt, net $ 207,057  $ 212,555 
Debt, net - current portion $ 79,877  $ 86,514 
Debt, net - non-current portion $ 127,180  $ 126,041 
(1)This amount is related to the promissory notes issued to Sammartino in connection with the acquisition of Nature's Remedy in September 2021. Any repayment of principal and interest are currently on hold until the resolution of the Sammartino Matter. Refer to Note 18 - Commitments and Contingencies for more information.
(2)On February 16, 2022, Jushi Europe filed a notice of over-indebtedness with the Swiss courts. Then, the Swiss courts declared Jushi Europe’s bankruptcy on May 19, 2022. As a result, Jushi Europe updated its corporate name to Jushi Europe SA in liquidation, which is still on-going. This debt balance will be adjusted, including the extinguishment of any outstanding debt, upon the final liquidation of Jushi Europe. Refer to Note 17 - Related Party Transactions for more information.
Second Lien Notes
On January 24, 2024, the Company entered into two Note Exchange Agreements with holders of approximately $9,850 of the Company’s unsecured debt (the “Existing Notes”). Upon closing of the transactions contemplated in the Note Exchange Agreements (the “Debt Exchange”) on February 6, 2024, the holders of the Existing Notes delivered the Existing Notes to the Company for cancellation, and the Company: (1) issued to certain direct and beneficial holders of the Existing Notes an aggregate of $4,750 principal amount of Second Lien Notes; (2) issued to certain direct and beneficial holders of the Existing Notes fully-detached warrants to purchase an aggregate of 1,800,000 of the Company’s SVS, with each warrant having an exercise price of $1.00 per SVS and an expiration of December 7, 2026; and (3) paid to the direct holders of the Existing Notes an aggregate of $2,750 in cash. Refer to Note 12 - Equity for more information.

The Debt Exchange was accounted for as a debt extinguishment, and resulted in the Company recording a non-cash gain on debt extinguishment of $399, which represents the difference between the reacquisition price of the Existing Notes and the net carrying amount of the Existing Notes prior to redemption. This amount was recorded in other income (expenses), net in the consolidated statements of operation and comprehensive income (loss).
Mortgage Loans
Arlington Mortgage
In December 2021, the Company entered into a $6,900 mortgage loan agreement (the “Arlington Mortgage”), which is principally secured by the Company’s retail property in Arlington, Virginia. The Arlington Mortgage bears a fixed interest rate of 5.875% per annum, payable monthly, and will mature in January 2027.
Dickson City Mortgage
In July 2022, the Company entered into a $2,800 mortgage loan agreement (the “Dickson City Mortgage”), which is principally secured by the Company’s retail property in Dickson City, Pennsylvania. The Dickson City Mortgage matures in July 2027 and bears interest at a variable rate equal to prime rate plus 2%. The interest rate as of March 31, 2024 was 10.5%.
Manassas Mortgage
In April 2023, the Company entered into a $20,000 mortgage loan agreement (the “Manassas Mortgage”), which is principally secured by the Company’s cultivation and manufacturing facility located in Manassas, Virginia. The Manassas Mortgage bears interest of 8.875% per annum as of March 31, 2024, payable monthly, and will mature in April 2028. The interest rate is variable and determined based on the 30-day average secured overnight financing rate plus 3.55%, with a floor rate of not less than 8.25%.
Financial Covenants
Acquisition Facility
The senior secured credit facility from Roxbury, LP, a portfolio company of SunStream Bancorp Inc., which is a joint venture sponsored by Sundial Growers Inc. (the “Acquisition Facility”), contains certain financial and other covenants with which the Company is required to comply, including covenants related to (i) minimum unrestricted cash and cash equivalents balance and (ii) minimum quarterly revenue. As of March 31, 2024, the Company was in compliance with all financial covenants contained in the Acquisition Facility.
Mortgage loans
The Company’s three mortgage loan agreements contain certain financial and other covenants with which the Company is required to comply. As of March 31, 2024, the Company was in compliance with all financial covenants contained in each of the mortgage loan agreements.
Annual Maturities
As of March 31, 2024, aggregate future scheduled repayments of the Company’s debt are as follows:
Remainder of the year 2025 2026 2027 2028 Total
Second Lien Notes $ —  $ —  $ 79,835  $ —  $ —  $ 79,835 
Acquisition Facility 57,687  —  —  —  —  57,687 
Acquisition-related promissory notes payable 3,750  —  —  22,114  —  25,864 
Mortgage loans 438  647  658  9,441  18,240  29,424 
Total debt subject to scheduled repayments $ 61,875  $ 647  $ 80,493  $ 31,555  $ 18,240  $ 192,810 
The above table excludes the contractual maturities of the Company’s (i) promissory notes payable to Sammartino and (ii) Jushi Europe debt, as the repayments of these two debts are contingent on the resolution of the Sammartino Matter and completion of the liquidation of Jushi Europe, respectively. Refer to Note 18 - Commitments and Contingencies and Note 17 - Related Party Transactions for more information. Specifically, the contractual maturities of (i) the promissory notes payable to Sammartino are as follows: $16,500 in 2024 and $5,000 in 2026 and (ii) Jushi Europe debt of $3,225 was March 2022.
Interest Expense
Interest expense, net is comprised of the following:
Three Months Ended March 31,
2024 2023
Interest expense
Interest and accretion - Second Lien Notes $ 2,748  $ 2,344 
Interest and accretion - Finance lease liabilities 2,668  2,349 
Interest and accretion - Promissory notes
 1,374  1,536 
Interest and accretion - Acquisition Facility 2,152  2,296 
Interest and accretion - Mortgage loans and other financing activities 706  185 
Capitalized interest —  (188)
Total interest expense 9,648  8,522 
Interest income (104) (2)
Total interest expense, net $ 9,544  $ 8,520