LOUISVILLE, Ky. (WDRB) — AppHarvest founder Jonathan Webb is stepping back from his leadership roles as the Kentucky agricultural startup struggles to ramp up sales and fend off creditors.
Webb, a University of Kentucky graduate who started the tech-focused farming company in 2017, will no longer serve as CEO and chairman of the board, the company said in a news release Thursday.
Chief Operating Officer Tony Martin, a veteran of the "controlled environment agriculture" business, takes over as a CEO, while Webb becomes chief strategy officer and keeps a seat on the board.
Webb owns about 12% of AppHarvest's stock, according to the company's proxy statement filed in April.
"Jonathan's vision to set a new standard in sustainable farming has brought attention to the need for climate-resilient agriculture that helps ensure domestic food security with a more sustainable footprint that's better for people and planet," Kevin Willis, AppHarvest's new chairman, said in the news release.
AppHarvest employs about 1,000 between its four Kentucky greenhouses, where it grows produce such as tomatoes, strawberries and salad greens.
AppHarvest is among a number of new ventures in "controlled environment agriculture," a method of farming using greenhouses or vertical buildings to increase yields while using less water and fewer pesticides. The premise is that, as the climate warms, the United States will need crops grown closer to where they are consumed instead of importing them from countries such as Mexico.
But sales have been much slower to materialize than the company projected in 2020 when it was hot commodity among investors.
Fending off creditors
The management shakeup comes as AppHarvest, which went public in 2021 and was once valued at $3.7 billion, fends off multiple creditors.
The company said earlier this year that it could run out of money to operate by October unless it raises more capital.
Two of AppHarvest's four Kentucky greenhouses are at risk: one in a foreclosure action and the other in a potential eviction.
On Tuesday, the company disclosed that its sole customer -- Canada-based produce distributor Mastronardi Produce -- is attempting to terminate AppHarvest's lease of the greenhouse it operates in Berea, Ky.
AppHarvest sold the greenhouse to a Mastronardi-affiliated buyer in December in a bid to raise cash.
AppHarvest told investors that it is contesting the allegation that it has violated its lease for the Berea facility.
In a statement, the company suggested the lease termination could be a defensive move by Mastronardi.
"AppHarvest believes it has met the terms of its lease agreement for the Berea farm and recognizes that such notices from creditors are not uncommon as a strategy for firms attempting to push their way to the front of the line in case of an actual default," the company said in a statement. "AppHarvest will defend its position with counterclaims should any damages result from Mastronardi’s attempted termination of the lease."
Mastronardi did not respond to a request for comment.
Meanwhile, the company disclosed in June that Equilibrium Capital, a sustainability-focused investor that lent money to AppHarvest, filed a foreclosure action to seize its Richmond, Ky. facility to secure unpaid debt. Equilibrium has not responded to requests for comment.
AppHarvest disclosed Tuesday that it skipped a $455,720 interest payment owed to Equilibrium by July 5.
"Based on ongoing dialogue with Equilibrium, the AppHarvest board has elected to defer an interest payment while seeking resolution to a lease issue," the company said.
