AppHarvest’s three remaining greenhouses will likely have new owners.
Equilibrium, an Oregon-based investment firm, submitted the only bid — a $113 million credit bid — in an auction Wednesday to acquire AppHarvest’s two largest farms in Morehead and Richmond, bankruptcy court filings show. Both of the 60-acre greenhouses grow tomatoes. AppHarvest had no comment on the result of the auction.
Bosch Growers — a Netherlands-based, family-run grower that has been in operation since 1854 — submitted the winning bid Thursday for AppHarvest’s last remaining farm, a 30-acre cucumber and strawberry greenhouse in Somerset. Greater Nevada Credit Union, a bank which provided a loan financing the farm’s original construction, submitted the second highest offer and was listed as the back-up bidder.
The result of the auctions — which are part of AppHarvest’s ongoing Chapter 11 bankruptcy process — are still pending court approval. Judge David R. Jones, of the federal bankruptcy court for the Southern District of Texas, is scheduled to consider the matter in a Sept. 6 hearing.
Court documents reveal little about what Equilibrium plans to do with the greenhouses in Richmond and Morehead and the hundreds of people employed at both. A request for comment sent to the company was not immediately returned.
The Somerset farm will be Bosch Growers’ first greenhouse in the U.S., Tijmen van den Bosch, the company’s president, told the Herald-Leader. He was able to recently tour the greenhouse and said it was “already a top-notch facility.” The company hopes to officially take over the farm within the next month with the hope of continuing operations.
“We’re super excited just to continue the operations, how it’s currently going, and to make it a big success,” van den Bosch said.
A purchase agreement filed in bankruptcy court said the principal amount of a loan from Greater Nevada Credit Union along with an amount disbursed by the bank “will constitute the purchase price.” A loan term sheet said the loan amount in aggregate was $20 million but, according to van den Bosch, the $20 million was not the full price and he declined to go into further detail about the purchase price.
What happened during the sale process?
During a public meeting of creditors August 25, which was mandated as part of the bankruptcy process, AppHarvest officials said the company’s greenhouses remained in operation.
The over 800 employees have continued to arrive for work with only a handful lost to attrition, Loren Eggleton, the chief financial officer at AppHarvest, said at the meeting.
As part of the sale process of AppHarvest’s assets, the company hired Jeffries LLC, a global investment banking firm, to assist the company during the bankruptcy proceedings.
Jeffries contacted approximately 105 potential buyers and about 36 asked for access to a virtual data room that provided confidential business information to possible buyers, wrote Richard Morgner, the managing director and joint global head of the debt advisory and restructuring group at Jeffries, in a court filing last week.
Early in the bidding process, Equilibrium was established as the “Stalking Horse Bid” — which sets the low bar for any other bids. Since no other bids came in for the Morehead and Richmond properties, they went to Equilibrium.
Equilibrium has long been involved with AppHarvest and has been active throughout the bankruptcy proceedings.
A subsidiary of Equilibrium loaned the Kentucky-based company over $90 million to help build the Richmond farm. In May, Equilibrium filed a foreclosure suit against AppHarvest, alleging that construction delays and cost overruns had caused AppHarvest to violate the terms of the loan.
After AppHarvest officially filed for bankruptcy in July, Equilibrium provided nearly $30 million in “debtor-in-possession” funding to help AppHarvest continue operations at its farms. Equilibrium also purchased another creditor’s secured claims to the Morehead facility, which effectively gave the investment firm claims to both the Richmond and Morehead farms.
AppHarvest originally built four greenhouses. Their fourth greenhouse in Berea was transitioned over to Mastronardi Produce, AppHarvest’s distribution partner. AppHarvest had already sold the property to Mastronardi in a cash-generating move back in December.
There are no concrete plans for the future of AppHarvest’s large office presence in downtown Lexington, Travis Parman, a company spokesperson said. The company anticipates being in the space at least through September.
What is Equilibrium?
The investment firm — established in 2008 and headquartered in Portland, Oregon — is focused on making investments in sustainable and climate-friendly initiatives, the company’s website shows. The company also has offices in San Francisco, Singapore and London.
David Chen, the CEO and founder, represented Equilibrium on the AppHarvest board from 2019 to 2021, his online bio said. He fills a similar role on the boards of two other controlled environment agriculture companies — which like AppHarvest grow produce on a massive scale inside large greenhouses.
The firm began investing in large-scale agriculture and food projects in 2011, Chen told the Herald-Leader in 2019.
The company closed the industry’s largest controlled environment agriculture fund at over $1 billion in 2021, reported Hortidaily, a Netherlands-based website covering greenhouse horticulture worldwide.
“There have been boom periods in controlled agriculture, in high tech greenhouses. But even the Dutch industry now realizes something different is happening right now,” Chen told Hortidaily. “North America has converted from thinking of greenhouses as a complement to the field, now it’s becoming a replacement of the field.”