An unnamed institutional investor has drastically tightened its leash on AVAX One, raising the Nasdaq-listed crypto firm's minimum liquidity requirement 35-fold and strictly excluding its namesake Avalanche token from counting toward the new threshold.
The stringent restructuring, detailed in an Aug. 5 Securities and Exchange Commission (SEC) filing, follows the July departure of CEO Jolie Kahn. Her exit triggered a default on a key-person covenant, forcing the digital asset treasury company to renegotiate its debt.
Kahn previously orchestrated the firm's pivot from agriculture to digital assets under the AgriFORCE moniker. Since her exit, the company’s shares have fallen about 42% to $3.20.
This move comes amid a broader restructuring where AVAX One retired $6.8 million in outstanding principal debentures.
AVAX One faces stringent debt conditions
Under the agreement, the institutional investor waived the breach after AVAX One paid $1.3 million and accepted significantly tougher financial conditions.
The first change was a 3,400% increase in the company’s minimum liquidity requirement to $3.5 million from $100,000. The amended covenant recognizes only bank cash and Bitcoin held in custody.
This means that AVAX One’s core Avalanche treasury is unable to satisfy the test regardless of its market value. CoinGecko data shows the company holds nearly 14 million AVAX tokens worth about $88 million.
AVAX One also faces a 180-day deadline from Kahn’s departure to appoint a permanent CEO deemed acceptable to the lender. Peter Wylie Jr. currently serves as interim chief executive.
The agreement also raised the remaining debenture’s principal to $8.47 million from $7.7 million before applying the $1.3 million payment.
The filing did not explain the $770,000 increase. AVAX One said the broader restructuring included repayment premiums, but did not directly link them to the adjustment. After the payment, about $7.42 million remained outstanding.
The lender also accelerated its capital recovery by increasing monthly redemptions to one-tenth of the original principal from one-twenty-fifth.
Finally, the accelerated conversion price was reduced to 82.5% from 85% of a benchmark tied to the three lowest trading prices over the previous 10 trading days.
The deeper discount could allow the lender to receive more shares when converting the debt, increasing potential dilution for existing investors.
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