Sunday, August 13, 2023

Indoor Farming Bubble: "AppHarvest files Chapter 11 protection, plans to sell its Kentucky-based indoor farming facilities"

A few weeks late getting to this but it's the bookend to a mini-mania and deserves a place on the blog.

From AgFunderNews, July 24:

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.”....

If I ever us phrases like "transitioning the strategic plan" for the after-bankruptcy clean-up effort, just send me to Inuit territory, put me on an ice floe and give it a good push.

March 3, 2023
"The vertical farming bubble is finally popping"
Way back in 2020 we were seeing stuff like:

Now the Farmers Are Going Public Via SPACs
Not just any farmers though. This one plans to have the world's largest greenhouse.
And EBITDA by 2025.
When you are forecasting five years out it's probably a good idea to factor in the small but not zero chance of the Chinese Tomato Blight ravaging the world's vines.
(I made up the name for the blight, I have no idea what ails tomato plants)....

Followed by:
ICYMI: Indoor Farming Company AppHarvest Came Public Via SPAC (APPH)
Please excuse the delay on this post, we don't do much with IPO's and especially don't do much with SPACS, shell companies, blind pools or whatever they are being called now. S-1 filings are worth a look for the amount of information they disclose but that's about as far as our interest extends.

Which led to:
Indoor Farmer AppHarvest Plunges After Farm Delays (APPH)
For whatever reason, ZeroHedge chooses to go with "Martha Stewart-Backed" in their headline. I mean, it's true, she's an investor but unless the Tyler Durdens (for they are multiple) hate Martha Stewart I'm not sure why they put her up front.

"US vertical farming group AeroFarms joins unicorn club, strikes SPAC deal to go public"
Now is the time we juxtapose.
I was idly flipping through back issues of Vertical Farm Daily and stopped at this headline:
at the same time this from AgFunder dropped out of one of the feedreaders...

Which, by now you know the drill, led to
Not So SPACtacular Indoor Farming: "AeroFarms & Spring Valley terminate $1.2bn SPAC deal"
Jamie Powell, Winston Churchill, and Anthony Downs On A Variant Of Semantic Satiation

Indoor Farming: "AppHarvest’s Spac forecasts go splat"

Always indoor grown fruit jam tomorrow, never indoor grown fruit jam today:
"For Today's SPACs, 2024 Will Be The BEST YEAR EVER"

Indoor Farming: "AppHarvest CEO envisions 'couple-decade journey' after going public" (APPH)
Good grief, a quarter of our readers could be dead by that time.
(more if the nukes start flying)

 See also:
                              Black Knight:   "It's just a flesh wound!" 

                              King Arthur:       "Look, you stupid bastard, you've got no arms left!"
          Black Knight:    "I am invincible! 
          King Arthur:      "You're a loony!" 
          Black Knight:    "The Black Knights always triumph!"

There are a few dozen more but rather than list them, quick kudos to former FT Alfalfaville scribe Jamie Powell for his dubiosity (and a tip d'chapeau to current FT Alfalfavillain Bryce Elder for the "Alfalfaville" moniker) and finally a guy who could have helped the VC's avoid a lot of pain:

Vaclav Smil: "How Much Energy Does It Take to Grow a Tomato?"