Hydrofarm Prices $8.3 Million Offering and Terminates $109 Million Loan

Hydrofarm Holdings Group said on October 27, 2026 that it priced a registered direct offering of common stock and a concurrent private placement expected to raise approximately $8.3 million in gross proceeds, and that it entered into agreements with the holders of its senior secured term loan to satisfy the $109 million loan in full with preferred stock and warrants, according to the company’s announcement.

Under the registered direct offering, investors agreed to purchase 1,599,400 shares of common stock at a purchase price of $0.905, priced at-the-market under Nasdaq rules. In the concurrent private placement, investors agreed to purchase 7,611,575 unregistered shares of common stock, or pre-funded warrants in lieu thereof, and 9,210,975 common stock purchase warrants at a purchase price of $0.9050. Each common warrant is exercisable for one share of common stock at an exercise price of $0.78 and expires five and a half years from the issuance date. Total gross proceeds, before deducting the placement agent fee and offering expenses, are expected to be approximately $8.3 million, and all of the shares, pre-funded warrants and common warrants are being sold by the company.

Chairman and Chief Executive Officer Bill Toler, as well as additional officers and directors of the company or their affiliates, will participate in the offering on the same terms as the other investors. ThinkEquity is acting as sole placement agent and advisor to Hydrofarm in connection with the transactions. The company said it intends to use the net proceeds for general corporate purposes, and that closing of the offering is expected on or about October 27, 2026, subject to satisfaction of customary closing conditions.

Hydrofarm, based in Shoemakersville, Pennsylvania, describes itself as a leading independent manufacturer and distributor of branded supplies and equipment for controlled environment agriculture.

Term Loan Satisfaction

In conjunction with the closing of the offering, Hydrofarm entered into agreements with the holders of the term loan and the agent under it to issue 27.5 million shares of Series 1 Non-Voting Convertible Preferred Stock and common stock purchase warrants covering 27.5 million shares of common stock to satisfy the term loan in full. Each preferred share converts into one share of common stock, and each lender warrant is exercisable for one share of common stock at an exercise price of $0.78. Conversion of the preferred shares and exercise of the lender warrants are subject to shareholder approval.

Hydrofarm reported the transactions in a Form 8-K filed with the Securities and Exchange Commission on October 27, 2026, which described the transaction as the termination of the company’s $109 million senior secured term loan. The report, filed under Items 8.01 and 9.01 and signed by Toler, included the press release as Exhibit 99.1 and an investor presentation dated October 27, 2026 as Exhibit 99.2, materials the company said it may use in meetings and other communications with investors, analysts and other market participants.

The registered direct offering is being made under a registration statement on Form S-3 (File No. 333-291444) filed with the SEC on November 12, 2025 and declared effective on December 10, 2025, together with the base prospectus dated December 10, 2025 and a prospectus supplement to be filed. The private placement is being made in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D. Those securities have not been registered and may not be offered or sold in the United States absent registration or an applicable exemption, and Hydrofarm agreed to file a registration statement covering the resale of the private placement shares and the shares underlying the pre-funded warrants and common warrants, with any resale made only by means of a prospectus.

Loan History and Financial Condition

The term loan is a $125 million senior secured term loan borrowed under a Credit and Guaranty Agreement dated October 25, 2021 and amended on June 27, 2023, with JPMorgan Chase Bank originally acting as administrative and collateral agent, according to an April 2026 Form 8-K.

JPMorgan notified Hydrofarm on February 11, 2026 that an event of default had occurred and was continuing under the credit agreement because the company failed to pay interest due on January 31, 2026 within five days of the due date. On April 8, 2026, the company entered into a forbearance agreement with the lenders and FEAC Agent LLC, JPMorgan’s successor as administrative and collateral agent, under which the agent and lenders agreed not to enforce remedies solely with respect to that default during a forbearance period running from April 8, 2026 to the earliest of April 30, 2026, extendable in fifteen-day increments, or a termination notice from the agent. Conditions included maintaining an average daily cash balance of at least $1 million, presenting at least two bids from asset valuation providers and an asset-sale term sheet, obtaining lender-approved budgets, and refraining from investments and restricted payments other than rent due under certain finance leases. A related Amendment No. 2 replaced JPMorgan with FEAC as agent and added liquidity reporting requirements and a $1 million minimum liquidity covenant.

Hydrofarm’s Form 10-Q for the quarter ended June 30, 2026 reported $6.613 million in cash, cash equivalents and restricted cash and a working capital deficit of $108.123 million. The filing said the company’s recurring operating losses, negative cash flows from operations and significant debt obligations due within twelve months because of the event of default on the term loan, together with non-compliance with certain Nasdaq listing requirements, “raise substantial doubt about the Company’s ability to continue as a going concern.” Management’s plans to address those conditions included cost reductions through restructuring, negotiations with lenders and key vendors, and pursuing additional financing or strategic alternatives, including an offering of equity securities or the sale of assets or businesses. The filing said those plans, excluding the sale of Aurora Peat Products ULC, were not within the company’s control and could not be deemed probable, and concluded they did not alleviate the substantial doubt.

The 10-Q balance sheet classified $114.42 million of long-term debt as current at June 30, 2026, compared with $111.853 million at December 31, 2025, leaving $39 thousand of long-term debt outside current liabilities.

The filing also disclosed that Nasdaq notified the company on April 1, 2026 that it did not comply with the $2.5 million minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1). After granting an extension, Nasdaq determined on July 2, 2026 that the company had not satisfied the extension’s terms, and the company requested a hearing before the Nasdaq Hearing Panel on July 9, 2026, which stayed further action pending completion of the hearing process. Separately, Nasdaq notified the company on July 6, 2026 that it was not in compliance with the $1.00 minimum bid price requirement, with a 180-day compliance period to regain compliance.

For the second quarter of 2026, Hydrofarm reported net sales of $23.211 million versus $39.245 million a year earlier, and a net loss of $10.631 million versus $16.861 million. The six-month net loss was $25.242 million. As of August 12, 2026, the company had 4,819,323 shares of common stock outstanding.