AppHarvest has issued a statement in response to recent news about the Kentucky-based greenhouse grower’s credit issues, property and financial concerns.
In an email to The Packer, AppHarvest Chief Communications Officer Travis Parman said the company is seeking a resolution to Rabo Agrifinance’s recent loan repayment demand that won’t interrupt production at the company’s oldest and most productive farm facility in Moreland, Ky.
“The Rabo AgriFinance demand is due to a cross-default provision automatically triggered by allegations of default from other lenders, which AppHarvest contests,” the statement said. “We are working with Rabo to come to a resolution and will pursue a defense to any enforcement on their part that disrupts our business.”
Triaging mounting financial concerns
Additionally, AppHarvest is working with multiple partners to continue business as usual under the new leadership of Tony Martin, Parman said in a statement.
“AppHarvest is diligently working to restructure the company in an effort to make it profitable and to preserve value and jobs. The company has seen significant increases in production volume and quality under the leadership of Tony Martin who recently was named CEO,” the statement said. “AppHarvest is working closely with multiple partners to secure financing and in the meantime is continuing business as usual — including shipping product from each of the four farms.”
As part of its recovery plan, AppHarvest recently appointed Martin, a controlled environment agriculture and produce industry veteran, as CEO. Martin reportedly has a strategy for refocusing the company in the years ahead, which he calls “Project New Leaf.”
Project New Leaf’s objective is to focus AppHarvest’s workforce on improving labor efficiency, implementing disciplined close controls, leveraging industry relationships and improving feedback across the organization over the next five years, according to a news release.
More on App Harvest’s Moreland farm loan
According to a recent SEC filing, Rabo AgriFinance has demanded repayment from AppHarvest on its $47.2 million loan tied to the company’s Moreland farm facility, claiming AppHarvest defaulted on its credit agreement on July 3. If the two companies cannot come to an agreement, AppHarvest faces foreclosure on the largest farm in its four-farm network. Funding terms for the construction of AppHarvest’s Morehead tomato farm included a cross-default provision in the loan agreement.
Rabo AgriFinance’s cross-default loan provision allows the lender to request full payment of its loan and begin foreclosure proceedings if AppHarvest were to default on any of its other loans.
The conditions of this cross-default loan provision appear to be unfolding now, as the recent threat of foreclosure for the Moreland farm facility comes on the heels of a recent lease dispute with Mastronardi Produce, which is the creditor and landlord for an AppHarvest farm in Berea, Ky., and a recent loan default notice from Equilibrium related to a farm in Richmond, Ky.
