Convertible note gives Local Bounti (NYSE: LOCL) $12.5M and new warrant
Rhea-AI Filing Summary
On August 7, 2026, Local Bounti Corporation entered into a Convertible Note and Warrant Purchase Agreement with U.S. Bounti, LLC for a $12.5 million convertible note and a warrant to purchase 1,000,000 common shares. Proceeds are intended for working capital and general corporate purposes.
The note bears 7.0% annual interest, initially paid as payment-in-kind interest added to principal, and is convertible at an initial $1.37 per share. Full conversion of the initial principal would result in 9,124,088 shares, with automatic conversion of half the obligations on the fourth anniversary and the remainder at maturity, subject to an option to repay in cash if conditions are met. The warrant is immediately exercisable at $0.125 per share for 10 years.
Until stockholders approve the transaction under New York Stock Exchange rules, U.S. Bounti is limited to receiving no more than 1% of outstanding common stock from conversions or warrant exercises. A concurrent letter agreement with Cargill Financial revises the Senior Credit Agreement, reducing the minimum liquidity covenant to $3.5 million through March 31, 2027 and $2.0 million from April 1, 2027 onward, and permits certain interest to be paid in kind.
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Filing Explained
The company must seek the required NYSE stockholder approval at a special meeting no later than
8-K Event Classification
4 items: 1.01, 2.03, 3.02, 9.01
4 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
Financial
The company incurred a new significant debt or off-balance-sheet obligation.
Item 3.02
Unregistered Sales of Equity Securities
Securities
The company sold equity securities in a private placement or other unregistered transaction.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Convertible note principal: $12.5 million
Interest rate: 7.0% per year
Conversion price: $1.37 per share
+5 more
8 metrics
Convertible note principal
$12.5 million
Initial principal balance of the convertible note issued to U.S. Bounti, LLC
Interest rate
7.0% per year
Annual interest rate on the convertible note
Conversion price
$1.37 per share
Initial conversion price of the note into common stock
Shares on full conversion
9,124,088 shares
Common shares issuable upon conversion of full initial principal at $1.37 per share
Warrant shares
1,000,000 shares
Number of common shares underlying the common stock purchase warrant
Warrant exercise price
$0.125 per share
Exercise price of the warrant, exercisable immediately for 10 years
Minimum liquidity through 3/31/2027
$3.5 million
Revised minimum liquidity covenant under the Senior Credit Agreement
Minimum liquidity from 4/1/2027
$2.0 million
Ongoing minimum liquidity covenant after March 31, 2027
Key Terms
PIK Interest, Conversion Price, minimum liquidity covenant, Section 4(a)(2) of the Securities Act, +1 more
5 terms
PIK Interest financial
"will be payable semi-annually in arrears ... on each PIK Interest Payment Due Date (“PIK Interest”)."
Payment-in-kind (PIK) interest is interest on a loan or bond that is paid by adding to the borrower’s debt rather than by handing over cash; think of it as paying rent by giving an IOU that increases the total owed instead of using money now. Investors care because PIK raises short-term cash for the borrower but increases future risk — the lender receives a larger, deferred payment and assumes more credit and timing uncertainty.
Conversion Price financial
"The initial conversion price of the Note is $1.37 per share of Common Stock (the “Conversion Price”)."
The conversion price is the fixed price at which a convertible security, like a bond or preferred stock, can be exchanged for shares of common stock. It acts like a set rate that determines how many shares an investor can receive if they choose to convert their investment. This helps investors understand the value and potential benefits of converting their securities into company shares.
minimum liquidity covenant financial
"the parties agreed, among other things, to revise the minimum liquidity covenant to be $3.5 million"
A minimum liquidity covenant is a clause in a loan or bond agreement that requires the borrower to keep a certain amount of cash or easily sold assets on hand, like an agreed emergency fund. It matters to investors because it protects lenders and other creditors by reducing the chance of missed payments; falling below the required level can trigger penalties, default, or demands for extra collateral, which can affect a company’s borrowing costs and equity value.
Section 4(a)(2) of the Securities Act regulatory
"the Company relied upon the exemption from registration provided by Section 4(a)(2) of the Securities Act"
A legal exemption that allows a company to sell securities directly to a limited group of buyers without registering the offering with the Securities and Exchange Commission. Think of it like a private sale among known parties rather than a public auction: it can speed fundraising and reduce disclosure requirements, but it also means less public information, lower liquidity and resale restrictions—factors investors should consider when weighing risk and exit options.
Rule 506 of Regulation D regulatory
"and Rule 506 of Regulation D promulgated thereunder."
Rule 506 of Regulation D is a U.S. Securities and Exchange Commission exemption that lets companies sell securities privately without registering them with the SEC, similar to a private party invitation rather than a public auction. It matters to investors because it determines how much information they’ll receive, who can buy (accredited vs. non-accredited), whether public advertising is allowed, and how easily the investment can be resold — all factors that affect risk, transparency and liquidity.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What financing did Local Bounti (LOCL) enter into on August 7, 2026?
Local Bounti entered into a deal with U.S. Bounti, LLC for a $12.5 million convertible note and a warrant for 1,000,000 common shares, with proceeds earmarked for working capital and general corporate purposes.
What are the key terms of Local Bounti (LOCL)'s $12.5M convertible note?
The note has an initial principal of $12.5 million, bears 7.0% annual interest paid initially as PIK interest, and is convertible at $1.37 per share, implying 9,124,088 shares on full conversion of the initial principal, before additional PIK interest.
What are the main features of the U.S. Bounti warrant in LOCL?
The warrant allows U.S. Bounti to purchase 1,000,000 Local Bounti common shares at an exercise price of $0.125 per share. It is exercisable immediately and will expire 10 years from the initial exercise date.
How did the Cargill Senior Credit Agreement change for Local Bounti (LOCL)?
A letter agreement with Cargill Financial revised the Senior Credit Agreement, setting the minimum liquidity covenant at $3.5 million through March 31, 2027 and $2.0 million from April 1, 2027 onward, and allowing certain 2027 interest payments to be made in kind.
How and when is interest paid on Local Bounti (LOCL)'s convertible note?
Interest of 7.0% per year initially accrues and is paid semi-annually as PIK interest on June 30 and December 31, starting December 31, 2026, by increasing principal. After the third anniversary, interest may be paid in cash quarterly if specified conditions are met.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Washington, D.C. 20549
FORM 8-K
______________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 7, 2026
LOCAL BOUNTI CORPORATION
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) | |||||||||
(Address of principal executive offices, including zip code) | |||||||||||
Registrant’s telephone number, including area code: (800 ) 640-4016
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Convertible Note and Warrant Purchase Agreement
On August 7, 2026, Local Bounti Corporation, a Delaware corporation (the “Company”), entered into a Convertible Note and Warrant Purchase Agreement (the “Purchase Agreement”) with U.S. Bounti, LLC (the “Purchaser”), providing for the purchase, sale and issuance of (i) a convertible note with an initial principal balance of $12.5 million (the “Note”) and (ii) a common stock purchase warrant (the “Warrant”) pursuant to which the Purchaser has the right to purchase and acquire 1,000,000 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”). The Company intends to use the proceeds from the sale of the Note and the Warrant for working capital and general corporate purposes as set forth in the Purchase Agreement.
The Note bears interest at a rate of 7.0% per year, commencing on the date of the initial issuance of the Note (the “Issuance Date”). Interest will accrue semi-annually on each June 30 and December 31, commencing December 31, 2026 (each, a “PIK Interest Payment Due Date”), and will be payable semi-annually in arrears on each PIK Interest Payment Due Date by automatically increasing the principal amount of the Note by the amount of such interest (with such increased amount thereafter accruing interest as well) on each PIK Interest Payment Due Date (“PIK Interest”).
From time to time after the third anniversary of the Issuance Date, interest may be payable quarterly in arrears in cash on each March 31, June 30, September 30 and December 31, commencing December 31, 2029 (each, a “Cash Interest Payment Due Date”), in each case, in an amount equal to interest accrued during the quarter ending on such Cash Interest Payment Due Date, so long as certain conditions are met as set forth in the Note.
During the term of the Note, the Note will be convertible into shares of Common Stock from time to time at the option of the Purchaser, upon delivery on one or more occasions of a written notice to the Company electing to convert all or any portion of Note Obligations Amount. The initial conversion price of the Note is $1.37 per share of Common Stock (the “Conversion Price”). The Conversion Price is subject to adjustment for stock splits, dividends or distributions, recapitalizations or similar transactions.
On the fourth anniversary of the Issuance Date, fifty percent (50%) of the Note Obligations Amount will be automatically converted into shares of Common Stock at the Conversion Price. The remaining fifty percent (50%) of the Note Obligations Amount will be automatically converted into shares of Common Stock at the Conversion Price on the maturity date of the Note. Notwithstanding the foregoing, however, fifty percent (50%) of the Note Obligations Amount may be payable in cash on the fourth anniversary of the Issuance Date, with the remaining fifty percent (50%) of the Note Obligations Amount repaid in cash on the maturity date of the Note, so long as certain conditions are met as set forth in the Note.
Conversion of the full initial principal amount of the Note would result in the issuance of 9,124,088 shares of Common Stock if converted at $1.37 per share, which amount is subject to increase by any PIK Interest that is added to the outstanding principal under the terms of the Note.
The Purchase Agreement includes customary representations, warranties and covenants and sets forth standard events of default upon which the Note may be declared immediately due and payable and will be subordinated to the obligations under the Senior Credit Agreement.
The Warrant is exercisable immediately at an exercise price of $0.125 per share of Common Stock and will expire 10 years from the initial exercise date.
Pursuant to the terms of the Purchase Agreement, the Purchaser will not have the right to receive, upon conversion of the Note or exercise of the Warrant, any shares of Common Stock if the issuance of such shares of Common Stock would exceed 1% of the issued and outstanding Common Stock, except that such limitation will not apply after the date that stockholder approval is obtained and deemed effective, as required by the rules and regulations of the New York Stock Exchange (the “Required Stockholder Approval”). The Company is required to seek the Required Stockholder Approval at a special stockholders meeting not later than November 30, 2026.
The Note, the Warrant and the shares of Common Stock issuable upon conversion of the Note or exercise of the Warrant have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and may not be offered or sold absent registration or an applicable exemption from registration requirements.
The foregoing descriptions of the Note, the Warrant and the Purchase Agreement and the transactions contemplated thereby do not purport to be complete and are qualified in their entirety by reference to the full texts of the Note, the Warrant and the Purchase Agreement, copies of which are attached hereto as Exhibit 4.1, Exhibit 4.2 and Exhibit 10.1, respectively, and incorporated herein by reference.
Also on August 7, 2026, the Company entered into a letter agreement (the “Letter Agreement”) with Cargill Financial Services International, Inc., a Delaware corporation (“Cargill Financial”), to supplement certain terms of the Credit Agreement dated as of September 3, 2021, by and among Local Bounti Operating Company LLC, a Delaware limited liability company (“Opco”),
each subsidiary of Opco identified as a “Borrower” therein, and Cargill Financial (as amended by the letter agreement dated as of March 13, 2026 entered into between the Company and Cargill Financial, and as further amended, restated, supplemented or otherwise modified from time to time prior to the Transaction Date, the “Senior Credit Agreement”). Pursuant to the terms of the Letter Agreement the parties agreed, among other things, to revise the minimum liquidity covenant to be $3.5 million through March 31, 2027 and $2.0 million from April 1, 2027 forward, to enable the Borrowers to pay in kind interest accrued during the quarters ending March 31, 2027 and June 30, 2027 (so long as no Default or Event of Default, as such terms are defined in the Senior Credit Agreement, has occurred and is continuing), and Cargill consented to the issuance of the Note and the Warrant.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K (this “Current Report”) is incorporated by reference in this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 of this Current Report is incorporated by reference in this Item 3.02. In connection with the issuance of the Note and the Warrant described in Item 1.01, the Company relied upon the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | ||||
4.1 | Convertible Note by and between Local Bounti Corporation and U.S. Bounti, LLC. | ||||
4.2 | Common Stock Purchase Warrant issued by Local Bounti Corporation to U.S. Bounti, LLC. | ||||
10.1 | Convertible Note and Warrant Purchase Agreement, dated August 7, 2026, by and between Local Bounti Corporation and U.S. Bounti, LLC. | ||||
104 | Cover Page Interactive Data File (formatted as inline XBRL) | ||||
SIGNATURE
Pursuant to the requirements of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Local Bounti Corporation | |||||
/s/ Kathleen Valiasek | |||||
Name: Kathleen Valiasek | |||||
Title: President and Chief Executive Officer | |||||
Date: August 7, 2026