AppHarvest faces foreclosure of its Richmond tomato farm
Indoor grower AppHarvest recently received a default notice from its Richmond, Ky., farm lender, Equilibrium, according to a public filing. If the grower doesn’t reach a resolution soon, the creditor will assume AppHarvest’s Richmond farm facility as collateral.
The foreclosure complaint was filed May 30, giving App Harvest 20 days to respond in court or face a default judgement. AppHarvest’s Richmond farm facility is its second tomato farm, opened in late 2022, and is one of four grow sites in the Kentucky-based indoor farm network.
“We believe that we are in full compliance with the loan terms,” AppHarvest’s Corporate Communication Director Darla Turner told The Packer in a statement. “We are working to resolve the issue directly with Equilibrium, which we believe is based on their misunderstanding of the facts.”
Operations are continuing as normal, Turner added.
The notice states “certain defaults relating to increases in the construction budget and delays in construction made without [the lender’s] approval, the existence of a mechanic’s lien and alleged construction deficiencies,” according to the filing.
The potential foreclosure of the Richmond farm facility could trigger a domino effect for the controlled environment agriculture grower.
A default on AppHarvest’s Richmond farm loan could potentially lead to the foreclosure of other facilities in its four-farm network. Terms that funded the construction of AppHarvest’s Morehead, Ky., tomato farm — the company's oldest and most productive farm facility — included a loan agreement with Rabo AgriFinance with a cross-default provision.
Potentially, according to previous public filings, this provision would allow Rabo to request full payment of its loan and begin foreclosure proceedings if AppHarvest were to default on any of its other loans, such as the Richmond loan with Equilibrium.
More AppHarvest coverage on The Packer:
- Mastronardi funds AppHarvest to grow greens, expand farms in Appalachia (Nov. 3, 2022)
- Financial woes surface in investor report, but AppHarvest says it's ramping up (Nov. 29, 2022)
- AppHarvest’s Q1 earnings beat consensus (May 12, 2023)
