March 2, 2021

By Lynda Kiernan, Global AgInvesting Media

One month after AppHarvest merged with SPAC Novus Capital, went public on the Nasdaq under the symbol APPH, and gained a valuation of $1 billion, AppHarvest has now announced that it has acquired its flagship CEA facility in Morehead, Kentucky, from Equilibrium Capital for $125 million. 

AppHarvest’s tech-driven indoor farms grow high-quality produce using methods that use 90 percent less water than traditional field production (and 100 percent recycled rainwater), giving its non-GMO, chemical-free fruits and vegetables a competitive advantage against low-cost foreign imports.

From its location in Central Appalachia, AppHarvest’s 60-acre CEA facility (one of the largest in the world) is within less than a day’s drive to 70 percent of the entire U.S. population, lowering diesel fuel costs by 80 percent.

The company’s recent merger and IPO provided $475 million to the company, including $375 million fully committed common stock PIPE at $10 per share anchored by existing and new investors Fidelity Management & Research Company, Inclusive Capital, and Novus Capital Corporation, and others.

Equilibrium invested $82 million in AppHarvest in May 2019 for the construction of the high-tech, climate-controlled greenhouse project in Morehead. The $82 million all-cash deal was conducted through Equilibrium’s Controlled Environment Foods Fund, and funded the construction of the 60-acre greenhouse that would become the company’s first of its kind agricultural facility in Appalachia, which it leased back from Equilibrium. 

“The purchase of our first CEA facility allows us to reduce our operating costs by eliminating the previous lease expense and creates an opportunity to leverage a portion of this asset with low-interest debt that will create a positive return on equity for investors,” said David Lee, president, AppHarvest.

“As a testament to its climate resilience, our Morehead farm just set a performance record for harvesting, even as many other operators suffered weather-related challenges.”

Indeed, in January of this year the company announced the success of its first harvest of chemical pesticide-free, non-GMO and sustainably-grown beefsteak tomatoes which were shipped to select retailers such as Kroger, Publix, Walmart, Food City, and Meijer.

During the week of February 22, the Morehead team broke a performance record by harvesting more than 120,000 pounds of tomatoes in a single day from 30 acres currently planted. A further 30 acres planted in Tomatoes on the Vine variety is scheduled to be harvested in Q2 of this year. 

Once at full-steam, the Morehead facility is expected to produce about 45 million pounds of tomatoes per year from a total 720,000 Beefsteak and Tomato on the Vine plants.

“I applaud the hardworking team who really stepped up last week to accelerate our progress to provide customers with nutritious, chemical pesticide-free, affordable U.S.-grown tomatoes that can be delivered much more efficiently to nearly 70 percent of the country’s population, which is within a day’s drive of our farm here in Appalachia,” said Jonathan Webb, founder and CEO, AppHarvest

“Between the pandemic and the continued extreme weather events that have disrupted our food supply—especially of fresh food sensitive to spoiling—it’s clearer than ever that the climate-resilient solution AppHarvest provides is critical to ensuring a reliable domestic food system.”

Under the terms of the transaction with Equilibrium, Equilibrium’s chairman and CEO Dave Chen will exit the AppHarvest board, where he has been serving on the nominating and governance committee.

“AppHarvest is a phenomenal company,” said Chen. “I am privileged to have worked with them as a board member while Equilibrium has invested in supporting their growth and production. Equilibrium remains a supportive AppHarvest investor and looks forward to further mutually beneficial collaboration.”

Webb added, “We thank Dave for his tremendous leadership and insights that helped AppHarvest to begin operations and to prepare to go public as part of our mission to redefine agriculture sustainably, rooted in environmental, social and governance principles.”

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.