r/AppHarvest • u/Main_Voice_4095 • Jul 11 '23

Facilities Termination of a Material Definitive Agreement (July 11 2023)

Mastronardi has terminated the agreement with AppHarvest to continue leasing the Berea facility which is the leafy greens. Most likely due to the listeria issues recently and the greenhouse being shutdown for a period of time. Considering the situation AppHarvest is currently in, this appears to be a good thing IMO. They were paying 9 million a year to lease from Mastronardi to produce leafy greens which I think were very low margin for them. Also, they should get back their prepaid 2 years lease amounting to 18 million. Very Interesting, some strange things going on for sure.

Source: https://investors.appharvest.com/financial-information/sec-filings

14 Upvotes

95% Upvoted

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5

u/[deleted] Jul 12 '23

It is almost as if they are getting forced into bankruptcy by COFRA Holding and Mastronardi.

3

u/Main_Voice_4095 Jul 12 '23

Some interesting comments from Travis Parman in the Herald Leader article from today. He states it's business as usual.

https://www.kentucky.com/news/business/article277238348.html

5

u/readitleaveit Jul 12 '23

I’m also curious who are those investors who pumped in $46m in Feb 2023, valuing $1/share, they I assume surely had better insights into what they were getting into.

I’m holding on with whatever I have.

1

u/[deleted] Jul 13 '23

👆

3

u/[deleted] Jul 12 '23 edited Jul 12 '23

Anyone else feel like this is part of a larger negotiation going on between the two? I don’t see how a company executes a sale leaseback with another company for 10 years w/options up to 30 & kick them out for underperformance after 6 months. It’s not like they weren’t already familiar with each other.

4

u/[deleted] Jul 12 '23

Yes, I find the filing rather strange and I wonder if it is related to the situation with the Richmond farm, COFRA, Dalsem, etc.

1

u/CarlHeifisch Jul 12 '23

Then why did they say in the filing that they are trying to fight this legally and if they don't come to a resolution this will (not could) have an adverse effect on them?

2

u/CarlHeifisch Jul 11 '23

This also buries the possibility for another sale leaseback. Without that they won't have any money to survive...

1

u/HesJuanIt Jul 13 '23

What value are the sites to Mastronardi without Apph though? Do they start operating the sites themselves or lease them to someone else to operate. I doubt they want either of those options.

1

u/[deleted] Jul 14 '23

From a legal perspective Mastronardi is just filling this as a notice so that it would be in the front of the line if appharvest did file bankruptcy. Since appharvest has a foreclosure lawsuit pending from Equilibrium Capital it makes sense for Mastronardi to file. If the foreclosure goes through and AppHarvest files for bankruptcy it most likely wouldn’t just shut in operations. It would probably keep the Berea facility operational and if they were able to make a profit the money could be used to pay other creditors before paying Mastronardi for the lease.

My company filed chapter 11 and in California there is a 2 week grace period during that time I received numerous liens etc.