TerraVia selects Corbion’s $20m stalking horse bid in auction

By Elaine Watson

- Last updated on GMT

TerraVia selects Corbion’s $20m stalking horse bid in auction

Related tags Culinary algae oil Omega-3 fatty acid Fatty acid

Algae-fueled company TerraVia has selected a $20m stalking horse bid from Dutch ingredients supplier Corbion in an auction for the bulk of its assets, according to documents filed with the bankruptcy court on Tuesday.

In a filing you can read HERE​,​ attorneys for San Francisco-based TerraVia - which filed for bankruptcy protection​ under Chapter 11 on August 2 - said it had evaluated each bid made at an auction in New York on Monday, and selected Corbion’s $20m offer for the bulk of its assets along with a $900,000 bid from TCP Algenist LLC for Algenist Equity.

Alternate bids selected were a $3.2m offer from Gruener Ventures for IP assets; a $3.3m bid from Lawrence Johnson, a representative of the Salim Group, for TerraVia's production facility in Peoria, IL; and an $875,000 bid by Gruener Ventures for Algenist Equity.

If the successful bidders fail to consummate the proposed deals, the alternate bids will be deemed successful, said TerraVia's attorneys, who said the selection was made "on the basis of financial and contractual terms and other factors relevant to the sale process, including factors affecting the speed and certainty of consummating the transaction."

A hearing to consider approval of the bids for TerraVia is scheduled for Friday, September 15.

Corbion to retain at least 50 employees

According to an asset purchase agreement filed with the court on August 2,​ Corbion has agreed to retain a minimum of 50 TerraVia employees (at the time of the bankruptcy filing CFO Tyler Painter said​ it employed "approximately 77 full- and part-time employees​").

TerraVia’s portfolio includes specialty oils for the food, animal feed and personal care markets, lipid-rich and protein-rich whole algae powders for the food and supplements market; and structured fats (aka ‘algae butter’).

While operations at TerraVia’s facility in Peoria, Illinois – where it has been manufacturing Thrive culinary algae oil and its AlgaVia protein and lipid powdered ingredients – have been suspended, the facility is being “maintained in a state of readiness​” such that it can be turned back on at short notice, while the company has also been building inventory to service both existing customers and projects in the pipeline.

Terravia: The portfolio

Products in TerraVia’s portfolio include: AlgaPrime DHA​ , a long chain omega-3 fatty acid targeting the animal feed market; AlgaPür​ , a ​specialty oil targeting personal care markets; culinary algae oil Thrive​ (a retail product): AlgaVia​ lipid-rich and protein-rich whole algae powders: AlgaWise high oleic algal oils​ : and AlgaWise algae butter​ (a cocoa and shea butter replacement which had been pegged for a 2018 launch).

AlgaVia Protein Powder TerraVia

TerraVia (which posted a net loss of $22.6m on revenues of $4.5m in the first quarter of 2017) had originally hoped to make a splash in the alternative energy and industrial lubricants market, but made the strategic decision to focus exclusively on food, feed and personal care, rather than biofuel/industrial products, in 2016.

While it reduced its headcount and raised $20m last year by selling a majority stake in its Algenist skincare brand to private equity firm Tengram Capital Partners, TerraVia was not able to reach a deal with noteholders on a cash injection needed to keep the business out of bankruptcy, or negotiate a sale of some or all of the rest of the business before it became clear that it was going to run out of money, said CFO and COO Tyler Painter in a statement​ ​filed with the bankruptcy court on August 2.

 “In spite of its best efforts to create economies of scale and rapidly commercialize and profit from its product lines, TerraVia’s liquidity position has been affected by high operating costs and delays in successfully scaling up production​ [at a production facility developed with JV partner Bunge in Brazil].

“In addition to high operating costs and production delays, throughout 2015 and 2016, the price of petroleum and other plant-based oils experienced a persistent and protracted decline. This macro-economic trend hindered TerraVia’s near-term ability to compete with lowcost alternative products in the oils market.

“In the past year, as it became clear that its liquidity situation was unsustainable, TerraVia undertook several cost-cutting and restructuring initiatives. While these initiatives improved TerraVia’s financial position, they did not fully resolve the underlying issues that burden TerraVia’s finances.”

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