Business Context and Reporting Period
This Form 8-K, dated April 27, 2026, reports on Borealis Foods Inc.'s entry into a new material definitive agreement and the termination of a prior credit facility. The filing addresses the company's refinancing efforts to resolve a forbearance situation with its previous lender, Frontwell Capital Partners Inc., and outlines new obligations with Oxus Capital PTE Ltd., the company's former SPAC sponsor.
Key Financial Metrics and Capital Structure
- New Term Loan: $17.0 million principal amount from Oxus Capital PTE Ltd.
- Interest Rate: 12% per annum (subject to a 2% default rate increase).
- Maturity Date: April 27, 2031.
- Repayment Terms: 48 monthly installments commencing May 1, 2027, on a straight-line amortization basis. Interest is payable monthly in arrears starting May 1, 2027.
- Previous Debt Repaid: Approximately $16.2 million used to fully repay the Frontwell Capital Partners facility.
- Transaction Costs: Approximately $375,000 paid in expenses; $425,000 remaining for the company.
- Potential Equity Conversion (Debt): Approximately $29.1 million in principal plus $4.2 million in accrued interest (total ~$33.3 million) from related party shareholders is subject to automatic conversion into common shares if specific equity financing conditions are not met by July 1, 2026.
- Potential Equity Conversion (Interest): Up to approximately $2.0 million in Year 1 interest may be converted into common shares at the lender's election.
Material Changes Versus Prior Period
- Lender Change: The company replaced Frontwell Capital Partners Inc. with Oxus Capital PTE Ltd. as its primary lender.
- Security Release: Frontwell released all liens and security interests on company assets, and deposit account control agreements were terminated.
- Management Change: Jeffrey T. Varsalone's engagement as Chief Restructuring Officer was terminated immediately, as the role was no longer required following the refinancing.
- Board Composition: The company is required to reconstitute its Board of Directors by May 11, 2026, to appoint two designees of Oxus.
- Covenant Structure: The new agreement includes a financial covenant limiting Capital Expenditures to 120% of the budgeted amount and a mandatory prepayment clause for 100% of net cash proceeds from equity issuances (with exceptions).
Guidance, Outlook, Risks, and Contingencies
- Equity Financing Condition: A critical contingency exists regarding a "Required Equity Financing" of at least $70 million at $9.00 per share by July 1, 2026. Failure to meet this triggers the automatic conversion of ~$33.3 million in related-party debt into equity, which could be significantly dilutive.
- Going Concern: The new financing provides a longer-term source of liquidity and eliminates the immediate "substantial doubt" regarding the company's ability to continue as a going concern that existed under the previous forbearance agreement.
- Nasdaq Compliance: The company is currently not in compliance with Nasdaq Listing Rule 5250(c)(1) due to a delayed Form 10-K for the fiscal year ended December 31, 2025. The company expects to file this report by May 19, 2026.
- Related Party Transactions: Both the Credit Agreement and Conversion Agreement involve related parties (Oxus, CEO Reza Soltanzadeh, and Chairman Barthelemy Helg) and were approved by disinterested board members.
- Events of Default: Includes the cessation of employment of Reza Soltanzadeh as president (with a 180-day cure period) and any default under the Conversion Agreement.
Investor Verification Checklist
- Verify the company's ability to raise $70 million in equity by July 1, 2026, to avoid automatic debt-to-equity conversion.
- Confirm the filing of the delayed Form 10-K for the fiscal year ended December 31, 2025, by the expected date of May 19, 2026, to maintain Nasdaq listing.
- Monitor the upcoming Board of Directors reconstitution scheduled for May 11, 2026.
- Review the full text of the Credit Agreement (Exhibit 10.1) and Conversion Agreement (Exhibit 10.2) for detailed covenants and conversion mechanics.
- Assess the dilutive impact of the potential issuance of shares for the ~$33.3 million debt conversion and the ~$2.0 million interest conversion.