Mastronardi Produce, a Canada-based fruit-and-vegetable supplier, has expanded its network by acquiring two former AppHarvest facilities.
The indoor-farming business, AppHarvest, filed for Chapter 11 bankruptcy earlier this year. It operated four farms in Kentucky, specializing in tomatoes, strawberries, cucumbers, and leafy greens grown under controlled indoor conditions.
In 2022, AppHarvest reported a net loss of $176.6m, compared to $166.2m in the previous year. The company had over $300m in funded debt and lease obligations. Equilibrium Capital purchased two sites in Richmond and Morehead, Kentucky, which are now leased to operators under Mastronardi Produce.
Mastronardi Produce, a distribution partner of AppHarvest, considers these deals as its entry into the state.
“We are very proud to keep the Morehead and Richmond facilities online and to grow with the teams there,” said Paul Mastronardi, President and CEO of Mastronardi Produce.
When AppHarvest applied for Chapter 11, they planned to sell the Berea facility to Mastronardi Produce for approximately $3.8m.
Mastronardi Produce specializes in growing and marketing a range of products under the Sunset brand, including tomatoes, peppers, cucumbers, and berries.
In the year ending December 31, AppHarvest’s sales reached $14.6m, a 60% increase from the previous 12 months. However, adjusted EBITDA remained negative at $72m, compared to a loss of $69.9m. At the time of the announcement in March, the company had $54.3m in cash and cash equivalents.
In 2021, AppHarvest went public through a merger with Nasdaq-listed special purpose acquisition company (SPAC) Novus Capital. They successfully raised $46m through the sale of additional shares, having initially planned to raise $40m.
The challenges faced by AppHarvest reflect the capital-intensive nature of controlled indoor farming, which requires significant investment and scale. Several players in the industry have yet to turn a profit, with some companies ultimately going out of business, such as Eider in the UK, Upward Farms in New York, Future Crops in the Netherlands, and Agricool in France.
Meanwhile, German-based indoor-farming business Infarm has undergone restructuring, reducing its market presence and workforce, and relocating operations from Berlin to the UK.
