TerraVia files for bankruptcy, announces potential sale

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TerraVia voluntarily applied to restructure and has had a $20m “stalking horse” stock and asset purchase agreement offered.

The California-based nutrition, food and specialty ingredient company, which also producers an algae-based DHA feed ingredient, announced Wednesday that it had filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the US Bankruptcy Court.

The cases are pending in the US Bankruptcy Court for the District of Delaware, according to official documents. The debtors listed on the documents include TerraVia Holdings, Solazyme Brazil and Solazyme Manufacturing 1.

The company also said that has entered into a “stalking horse” purchase agreement with Corbion NV. If approved, that acquisition would transfer all TerraVia’s assets to the Netherlands-based company.

“The acquisition of TerraVia's microalgae platform would extend Corbion's product portfolio into algae-based fatty acids and proteins, while leveraging Corbion's extensive fermentation and downstream processing capabilities,” Corbion said of the sale.

AlgaPrime and fish oil replacement

Part of TerraVia’s work with algae includes the production of an algae-based docosahexaenoic (DHA) ingredient that can act as a replacement of fish oil in aqua feed - AlgaPrime DHA.

The company released the oil product in a partnership with Bunge Limited in May 2016.  It was designed to meet the increasing need for omega-3s in fish feeds.

Graham Ellis, TerraVia senior vice president of business development and strategic accounts, told us at that time. “It expands the long-term joint venture partnership and aligns with a core strategic growth business (food and feed) for both Bunge and TerraVia,” he added.

He said that was the joint venture’s first product for the animal nutrition market.

The company announced in March that it had scaled up production to meet increasing industry demand for the DHA product.

“AlgaPrime DHA will play a critical role for us in 2017 and beyond. The expanded distribution agreement with BioMar that we announced today sets the stage with an anchor customer with broad global reach. Since scaling and making initial deliveries of our DHA product in mid-2016 marketplace interest and momentum have developed quickly,” said TerraVia CEO, Apu Mody on a conference call at that time.

Sale details

Corbion has offered $20m for TerraVia, and would assume certain liability, TerraVia said. “As part of the transaction, Corbion will be assuming the ongoing financial obligations of the business and its joint venture ownership, therefore the total financial commitment is expected to be in excess of the cash purchase price,” it added.

However, the process also is expected to include a bidding option for other qualified bidders, said TerraVia. There is a court-supervised process, where others could seek to purchase certain or all of the company’s assets that are being sold.

The sale is set to take from 60 to 90 days to complete, the company said.  

The sale could be altered if TerraVia receives a higher offer as part of the Section 363 sale, said Corbion. “As TerraVia's operations are currently loss making, Corbion expects the total financial commitments to be substantially in excess of the cash purchase price,” it added.

TerraVia also has established debtor-in-possession financing, which is to be used to offer working capital for the business while the sale is completed, the company said. It also will support payments for vendors for “post-petition purchases.”

It is unclear what the filing and upcoming sale will mean for the company’s product production and DHA joint venture as the company said the event is not expected to interfere with its obligations.

“The chapter 11 cases and the sale process should have no material impact on TerraVia's ability to fulfill its obligations to its customers and employees going forward,” the company said. “TerraVia has filed a series of motions with the Bankruptcy Court requesting authority to continue normal operations, including requesting Bankruptcy Court authority to continue paying employee wages and salaries, certain vendors and customer obligations in the ordinary course without interruption. TerraVia will continue its efforts to work closely with its suppliers and partners to meet ongoing obligations and continue its business without interruption.”

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