ABEC, which has been working with Eat Just/GOOD Meat on pilot facilities in California and Singapore, announced an exclusive deal with GOOD Meat in early 2022. Under the seven-year deal, ABEC would design, manufacture, install and commission ten 250,000-liter vessels— “the largest known bioreactors for avian and mammalian cell culture”—for a large-scale facility in the US with the capacity to produce up to 30 million pounds of meat.
In an amended complaint* filed last month vs Eat Just and GOOD Meat decrying their “repeated failures and broken promises,” ABEC explained that it had “engineered, designed, and established the manufacturing capability” for bioreactors “that would provide the economy of scale to allow for the affordable production of cultivated meat.”
It added: “Although ABEC has delivered on all of its commitments… including the construction of pilot scale bioreactors and support equipment for facilities in the USA and Singapore, defendants [Eat Just and GOOD Meat ] have failed to live up to their financial obligations, including failing to make payment on more than $30 million of invoices.”
ABEC therefore had “no choice but to terminate the large-scale bioreactor development and manufacturing agreement and associated purchase orders…and to seek to recover its damages,” added the complaint.
According to ABEC’s court filing, “GOOD Meat was woefully undercapitalized from the beginning, especially considering that the whole endeavor was likely to cost more than $1 billion, with commitments to ABEC for ABEC’s portion of the project alone likely exceeding $550,000,000.”
‘The largest known bioreactors for avian and mammalian cell culture’
Eat Just is not commenting on the litigation but is in arbitration with ABEC according to court documents, which means the two may still reach a settlement.
In a motion filed in late August, Eat Just urged the court to stay the suit vs Eat Just pending arbitration of the claims vs GOOD Meat. It also took issue with ABEC’s characterization of GOOD Meat as “woefully undercapitalized.”
ABEC did not respond to a request for comment.
According to Eat Just head of comms Andrew Noyes, Eat Just has raised more than $850 million to date including around $270 million for its wholly owned subsidiary GOOD Meat, which sells small amounts of cell-cultured chicken in Singapore and the US. (Click here to read about its latest round, announced Friday, which is on top of the $850 million.)
GOOD Meat funding
Speaking to AgFunderNews last week, Eat Just founder Josh Tetrick acknowledged that financing a large-scale US facility would require significant amounts of capital.
Asked if he was confident of securing it in the current climate, he said: “If ‘confident’ means certain, the answer is no, but if you mean, ‘Do I think it’s much more likely than not that that we and other companies will be able to finance the construction of these first facilities?’ then yes.”
‘Defendants began to fail to make timely payments on invoices owed’
According to court filings from ABEC, “By the end of 2022, defendants had issued approximately $280 million worth of work in purchase orders and agreed changes to ABEC on the project and had reserved production capacity to support over $550 million of work.
“Unfortunately, during this same time period, defendants began to fail to make timely payments on invoices owed to ABEC.”
By early March, says ABEC, it lost patience and started legal proceedings.
Attorney: ‘One possibility is that ABEC is ‘pot committed’ to its relationship with Eat Just/GOOD Meat’
Dale Giali, partner at law firm King & Spalding, which is not representing either party, told AgFunderNews that it would be unusual for two parties to continue a working relationship after a lawsuit like this, but said that “one possibility is that ABEC is ‘pot committed’ to its relationship with Eat Just/GOOD Meat.”
Perhaps he speculated, “To have a chance of getting paid off [ABEC] needs to make sure—via ensuring that Eat Just/GOOD Meat has appropriate manufacturing facilities—that Eat Just/GOOD Meat stay viable, so as to attract more investors and/or become profitable.
“Also, in any going forward business, ABEC has guarantees (already paid for the future work, terrific collateral, or given a part of the company).”
Should the parties reach a settlement, he further speculated, perhaps “there is a viable chance of being made whole by continuing the relationship.”
*The case is ABEC Inc vs Eat Just Inc, and GOOD Meat, Inc, filed in the Eastern District of Pennsylvania, 5:23-cv-01091.