Vertical farming company AeroFarms has filed for Chapter 11 bankruptcy protection to support its plans to focus on production of its branded microgreens from a single greenhouse in Virginia.
As part of the filing announced Thursday (June 8) by the the Newark, New Jersey headquartered company, AeroFarms agreed to a $10 million debtor in possession financing as part of a larger round of financing with a group of existing investors. The company said it is working with the DIP lending group on a transaction that will enable it to quickly emerge from Chapter 11.
David Rosenberg, AeroFarms co-founder and chief executive officer, has decided to step down from his position and chief financial officer Guy Blanchard will assume an additional role as president.
“We are fortunate to have existing investors who continue to believe in AeroFarms and are confident that we can hit our targeted profitable operations at our Danville farm,” Blanchard added in the statement.
AeroFarms did not reply to messages seeking further detail.
The company was founded in 2004 and provides branded leafy greens using aeroponics and LED lighting at commercial-scale indoor facilities in Danville, Virginia and Newark. It raised more than $200 million from investors that included the Wheatsheaf Group, the Abu Dhabi Investment Office, ADM Capital’s Cibus Fund, and others.
In March 2021, the company was set to go public and enter the Nasdaq exchange through a merger with Spring Valley Acquisition, a SPAC sponsored by Dallas, Texas-headquartered Pearl Energy Investments that raised $230 million in a November 2020 IPO. However the deal was called off in October 2021 and the business failed to go public.
In the bankruptcy filing, AeroFarms said the SPAC transaction proved unsuccessful due to challenging conditions in the capital markets and the company subsequently closed two rounds of Series 3-A preferred equity financing that raised approximately $21 million but were unable to meet its required capital needs.
AeroFarms’ capital structure described in the filing include loans from the Horizon Technology Finance Corporation, Powerscourt Investments and Doha Venture Capital, among others. The company also describes several financing agreements with Goldman Sachs designed to obtain advantages from qualified New Market Tax Credits created by the Community Renewal Tax Relief Act of 2000.
The filing describes AeroFarms as a pioneer in indoor farming with proprietary software that helps the company support its environmental and social aims to “grow the best plants possible for the betterment of humanity.”
“AeroFarms products are sold at a competitive price point at retail and food service, where they primarily compete against organic and field-grown alternatives. AeroFarms believes they have a competitive position in the industry because of the quality, taste and texture of their products, which are also pesticide-free,” the company wrote.
“While the projections show the creation of a profitable business, the Company’s business is capital intensive at this stage and attempts to raise sufficient capital to maintain operations have fallen short.”
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