Disclosure: AgFunder, the parent company of AgFunderNews, was an investor in indoor farming robotics company RootAI, which was acquired by AppHarvest in 2021.
- US-based indoor farming company AppHarvest has filed for Chapter 11 bankruptcy protection it says will aid in a “financial and operational” transition for the company.
- The company told AgFunderNews that it has funding to maintain business for the next 60 days for its Morehead, Richmond and Somerset, Kentucky farms.
- AppHarvest plans to sell its Berea, Kentucky greenhouse to its distribution partner Mastronardi Produce.
- The company has secured a commitment from Equilibrium Capital for $30 million of debtor-in-possession financing.
‘The goal is to minimize any disruption to employees’
AppHarvest chief communication officer Travis Parman told AgFunderNews that the company has enough funding “to maintain business as usual over the next 60 days at Morehead, Richmond and Somerset” and that AppHarvest will “spend that time also working to sell the farms.”
Parman said he expects more details after AppHarvest gets feedback from the court later this week.
“Pending court approval, we expect to transition the Berea farm to Mastronardi Produce—the company from which we currently lease that farm. We expect Mastronardi to make employment offers to the team in Berea,” he added.
“Over the next 60 days, we’ll be working to sell the farms to investors with the hope that they stay operational and continue to employ about the same number of folks as now. The goal is to minimize any disruption to employees. We don’t know yet whether any of the potential buyers intend to maintain the AppHarvest name.”
Transitioning the strategic plan
In a statement, new CEO Tony Martin, who took over the role from founder Jonathan Webb this month, said, “The Chapter 11 filing provides protection while we work to transition operation of our strategic plan, Project New Leaf, which has shown strong progress toward operational efficiencies resulting in higher sales, cost savings and product quality.”
AppHarvest went public via a SPAC in early 2021 and at one point aimed to be operating 12 indoor farming facilities by 2025. Parman confirmed that this is no longer the company’s strategy.
AppHarvest currently has four facilities in Kentucky that grow tomatoes, leafy greens, cucumbers and strawberries.
Earlier this year, the company halted production of leafy greens at its Berea facility after detecting the presence of Listeria monocytogenes, which can be dangerous to human health. At the time, AppHarvest said the move was “a temporary pause.”
AppHarvest had already completed a sale-leaseback deal for the Berea facility at the end of 2022 with Mastronardi. Now, AppHarvest says it is “pursuing a transition of its AppHarvest Berea operations to AppHarvest’s distribution partner, Mastronardi Produce, or one of its affiliates, in exchange for approximately $3.75 million.”
At the end of 2022, the company informed investors it was running out of cash; in May of this year, it said in a regulatory filing that it could run out of cash by October “absent additional sources of financing.” The company posted a net loss of $176.6 million in the year to December 31, compared to a loss of $166.2 million for the previous 12 months.
AppHarvest’s Chapter 11 filing comes just weeks after AeroFarms, another major name in the indoor farming space, filed its own Chapter 11 petition.
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