Local Bounti Corporation Announces \$15 Million Convertible Note and Warrant Financing, Plus Amendments to Senior Credit Facility

Key Highlights

• Local Bounti Corporation has entered into a Convertible Note and Warrant Purchase Agreement, raising up to \$15 million in new capital.
• The financing includes the issuance of a convertible note and a warrant to purchase 5,500,000 shares of common stock.
• The transaction is designed to provide working capital, fund general corporate purposes, and support certain capital expenditures.
• Concurrently, the company amended its senior credit agreement with Cargill Financial Services International, Inc. (“Cargill Financial”), easing certain liquidity and EBITDA covenants and obtaining consent for the convertible note transaction.
• Shareholder approval is required for the full conversion and exercise of the securities, with an initial 1% cap on share issuance until approval is obtained.

Details of the Financing Transaction

On March 13, 2026, Local Bounti Corporation, a Delaware corporation, entered into a Convertible Note and Warrant Purchase Agreement with Bounti, LLC (the “Purchaser”). This agreement provides for the private placement of:

• A convertible note with an initial principal balance of \$15 million.
• A warrant to purchase up to 5,500,000 shares of Local Bounti’s common stock, par value \$0.0001 per share.

The funds raised through this financing are intended for working capital, general corporate purposes, and specific capital expenditures as outlined in the agreement.

Terms and Conditions Investors Must Know

• Share Issuance Limitation: The Purchaser cannot receive, upon conversion of the note or exercise of the warrant, more than 1% of Local Bounti’s outstanding common stock until the company receives the required stockholder approval, as mandated by NYSE rules. The company is obligated to seek this approval at a meeting to be held no later than June 30, 2026.
• Unregistered Securities: The note, warrant, and the shares issuable upon conversion or exercise have not been registered under the Securities Act of 1933 and may not be offered or sold without registration or an applicable exemption. The company relied on Section 4(a)(2) and Rule 506 of Regulation D for the exemption.
• Conversion Price: The note is convertible into common stock at a price of \$2.50 per share, subject to standard anti-dilution adjustments and other protections.
• Warrant Terms: The warrant allows for cash or cashless exercise, with provisions for “fundamental transactions” (such as mergers, asset sales, or control changes) that may trigger adjustments or repurchase rights.

Amendments to Senior Credit Agreement with Cargill Financial

On the same date, Local Bounti executed a letter agreement with Cargill Financial, which is the lender under the company’s existing senior credit facility. The key amendments include:

• Liquidity Covenant: Minimum liquidity requirement is set at \$3.5 million through September 30, 2026, and \$2.0 million thereafter.
• EBITDA Covenant: Minimum EBITDA covenant testing is delayed to commence on March 31, 2027 (previously March 31, 2026).
• Consent for Note & Warrant: Cargill Financial has provided its consent for the issuance of the convertible note and warrant.

These amendments ease near-term financial constraints and provide the flexibility needed to pursue growth initiatives.

Potential Impact for Shareholders

• Potential Dilution: If fully converted and exercised (and subject to shareholder approval), the note and warrant could result in significant dilution to existing shareholders.
• Shareholder Vote Required: The company must obtain shareholder approval to remove the 1% cap on conversion and exercise, which may impact the company’s ability to fully utilize the financing.
• Balance Sheet Strengthening: The \$15 million financing, alongside relaxed credit covenants, strengthens the company’s liquidity position and may support strategic initiatives.
• Event-Driven Provisions: In the event of a merger, sale, or other fundamental transaction, the purchaser has the right to convert or require repurchase of the note, which could impact the company’s control and capital structure in such scenarios.

What Investors Should Watch For

• Shareholder Approval: Investors should monitor upcoming shareholder meetings for the vote on approving the issuance of shares related to this financing. Failure to obtain approval may limit the company’s access to capital and future flexibility.
• Capital Deployment: How the company utilizes the proceeds for growth and operational improvements will be key to long-term value creation.
• Pace of Dilution: The timing and extent of share issuance depend on the conversion of the note, exercise of the warrant, and shareholder approval.
• Regulatory Compliance: The company must maintain compliance with NYSE listing and SEC reporting requirements.

Conclusion

This transaction, by providing up to \$15 million in new capital and easing short-term loan covenants, is a major development in Local Bounti’s financial strategy. It provides the company with important liquidity but carries potential dilution risk for existing shareholders. The requirement for shareholder approval introduces uncertainty, and investors should closely track the company’s communications and upcoming meetings.