Cannabis operator Ayr Wellness restructures to cut debt by 50%, focus on growth
Multistate cannabis operator Ayr Wellness is undergoing a restructuring that will cut its debt in half, streamline operations and enable the company to come out stronger under new ownership.
Senior note holders, led by Boston-based investment adviser Millstreet Capital Management, have $387 million in credit to put toward purchasing Ayr Wellness’ assets and give them ownership of the company.
Representatives for Millstreet Capital Management could not be reached for comment.
Cutting debt, gaining new owners
Davido sees a lot of potential.
“When I came to Ayr, I was struck by how much support we had from our debt holders,” he said. “They really get the industry and believe in what we’re building.”
With over 2,000 employees and $463.6 million in annual revenue, Ayr Wellness is a major player in the cannabis industry. Davido said he is confident that the streamlined approach will set it up for growth.
As part of the restructuring, Ayr Wellness is narrowing its focus to the markets and operations that make the most sense for its future.
At a Nov. 10 auction, the debt holders are likely to acquire Ayr Wellness’ retail, cultivation and manufacturing facilities in Florida, Ohio, New Jersey and Pennsylvania as well as retail outlets in Nevada and Massachusetts.
“Our senior note holders are planning to participate in these auctions and bid on these assets to acquire the vast majority of the company,” said Davido, noting that it’s possible another party may bid for some or all of the business.
The company already has divested:
Massachusetts: cultivation/manufacturing and medical-only Needham dispensary.
Pennsylvania: three PA Natural stores and a cultivation facility in Pottsville.
Nevada: cultivation and process facility.
New Jersey: Lakewood cultivation facility.
Connecticut: one retail location.
A tough industry
The cannabis industry isn’t for the faint of heart. Between complicated regulations, high operating costs and the initial rush of overinvestment, it’s been a bumpy ride for many companies.
Ayr Wellness’ restructuring is part of a larger trend in the industry, where only the strongest and smartest players are expected to survive.
Davido compares it to other industries that went through similar shakeouts, like the cereal boom in the early 1900s when more than 80 cereal companies in Battle Creek, Michigan, were reduced to three.
“We’re in the winnowing-out phase,” he said. “A lot of companies have big debts coming due in 2026, and it’s not clear what the landscape will look like by then. We’ve been proactive to make sure we’re ready for whatever comes next.”
What’s next?
Ayr Wellness is pushing to finish its restructuring by the end of the year. The process involves state-by-state approvals for license transfers and asset sales, which can be slow, but the company is optimistic about the timeline.
Its senior note holders are expected to take over most of the business, ensuring a smoother transition and a stable future.