Plant protein tech company Burcon NutraScience says it is working with “additional industry participants” to acquire the assets of distressed plant protein processor Merit Functional Foods after the receiver rejected its initial bid.
PricewaterhouseCoopers (PwC) is currently fielding offers for the assets of Merit, which went into receivership on March 1. It had aimed to select a bidder by April 28, but has not since provided an update on the sales process.
On April 24, Burcon said it had submitted an offer to PwC with an “industry plant protein partner” with plans “to restart the facility and together, strive to reach profitability.”
In a statement released today, it said the bid had “not been accepted,” but that it believes “alternative competitive bids may still be accepted by the receiver under the sales process.”
It added: “Burcon continues to work with additional industry participants who have expressed an interest in jointly acquiring Merit’s assets. These participants required additional time beyond the receiver[s bid submission deadline to complete their due diligence.”
PwC has not returned calls or emails from AFN asking about the status of the sales process.
Burcon—which developed the protein extraction technology utilized by Merit—posted a net loss of C$16.3 million ($11.8 million) in the third quarter of fiscal 2023 (ending December 31, 2022).
However, a C$3.3 million ($2.5 million) fully subscribed non-brokered private placement announced today “is expected to provide sufficient runway to execute our Burcon 2.0 strategies,” said CEO Kip Underwood.
Long-term shareholders “including an insider and a new investor” have subscribed to the offering, which Burcon expects to close in two tranches, the first on May 8, and the second on or before May 11.
“Merit’s facility was custom-built to produce products from Burcon’s technologies, and we firmly believe Burcon has an important role in the future success of the facility,” said Underwood. “Our private placement financing also provides us the capital to pursue other promising opportunities to engage the market.”
High purity pea and canola proteins
Founded in 2019, Merit Functional Foods produces high-purity proteins using patented processes developed by Burcon. Its plant in Winnipeg, Canada, became operational in 2021 and has a capacity of 4,000 metric tons for canola and pea proteins. To date, it has received C$200 million ($147 million) in investment.
While the proteins “have been formulated into countless products globally,” said Merit co-CEO Ryan Bracken in LinkedIn post in February, Merit “couldn’t quite get to the level of cashflow needed to operate the business profitably, quick enough.”