Loan guarantees replace $50 million credit facility and free up additional cash
AppHarvest, Inc. (NASDAQ: APPH, APPHW), a sustainable food company announced in a press release today that it secured $50 million across two loans guaranteed by the United States Department of Agriculture (USDA) through Greater Commercial Lending (GCL), a subsidiary of Greater Nevada Credit Union. The financing supports AppHarvest’s high-tech indoor berry farm in Somerset, Kentucky, which is about 84% complete and expected to be operational by year-end.
“Securing non-dilutive sources of capital to fund our growth has been a top priority since going public early last year, and I’m pleased with our team’s ability to source lower-cost funding in a higher-cost lending environment,” said AppHarvest President David Lee. “This funding agreement with the USDA allows us to continue to scale operations as we plan to bring the Somerset farm and two additional CEA (controlled environment agriculture) facilities online before the end of the year, which would quadruple our farm network and diversify our product portfolio to include berries and salad greens.”
The USDA guarantees 80% of the GCL-arranged financing for the Somerset berry facility through its USDA Rural Development Business and Industry Initiative and the USDA Rural Development program. Each loan has a 23-year term with a rate that resets every five years based on the Federal Home Loan Bank five-year advance rate plus 340 basis points and is interest-only for the first three years.
The financing closed on July 29. Some of the funds will be used by the company to satisfy an existing $46 million loan with J.P. Morgan that was used in part to fund the initial construction phase of AppHarvest’s Somerset farm.