A domino effect of cascading credit issues and financial concerns have been trailing controlled environment agriculture grower, AppHarvest, in recent weeks. The latest financial challenge facing the indoor grower is at the company’s oldest and most productive farm facility in Moreland, Ky.
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.
The recent demand for immediate repayment from Rabo AgriFinance is no surprise, as terms that funded the construction of AppHarvest’s Morehead tomato farm included a cross-default provision in the loan agreement.
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According to previous public filings, Rabo’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, creditor and landlord for another AppHarvest farm located in Berea, Ky., and a recent loan default notice from Equilibrium at its farm in Richmond, Ky.
Related news: AppHarvest faces foreclosure of its Richmond tomato farm
In the most recent dispute, Mastronardi Produce disclosed that it planned to terminate AppHarvest’s lease on the property, alleging in a July 11 public filing, that “minimum production volumes” had been violated and reason enough for AppHarvest to vacate the facility.
Triaging mounting financial concerns
The indoor grower has a plan to surmount recent challenges, according to a news release. As part of the plan, AppHarvest recently appointed CEA and produce industry veteran Tony Martin to the position of 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, the release said.
