March 30, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Advanced U.S. indoor agricultural grower Local Bounti estimates that the U.S. market for herbs and vegetables will reach a value of $30 billion by 2025, with less than 1 percent of that produce currently being produced through indoor systems. 

For Local Bounti, which was launched in 2018 in Hamilton, Montana, by former energy industry executives Travis Joyner and Craig Hurlburt, this scenario presents both a need and an opportunity.

The company’s business model combines the best aspects of vertical and greenhouse growing through its innovative and proprietary Stack & Flow Technology, which has shown to significantly improve crop turns, increase output, and improve unit economics.

Over the course of its rather short existence, the company has established indoor growing facilities across the U.S., employing a sustainable, hybrid approach to production that integrates the best of CEA (Controlled Environment Agriculture) and natural elements. Additionally, it now services more than 10,000 retailers with its two brands: Local Bounti and Pete’s. 

But business is never static, and to fund its continued growth, Local Bounti announced it has secured an additional $145 million in new financing from two sources: the first, through an amendment to its credit facility agreements with Cargill Financial Services International; and the second, a sale-leaseback deal with an internally managed net-lease real estate investment trust for the sale-leaseback of its two facilities located in Carpinteria and Oxnard, California, for approximately $35 million – the closing of which is expected to occur in Q2 2023. 

It was in September 2021, when GAI News shared that Cargill (which is also an investor in the company) closed on its previously announced $200 million debt financing facility with Local Bounti – two moves that together demonstrate a high level of confidence and support for the company. 

On March 28, 2023, Local Bounti entered into an amendment of its existing credit agreements with Cargill to expand the facility to up to $280 million, including capital to fund construction at the company’s facilities in Georgia, Texas, and Washington. 

In exchange for this consideration, Local Bounti issued Cargill five–year warrants to purchase up to 69.6 million shares of common stock with a per share exercise price of $1 per share, representing more than a 100 percent premium to Local Bounti’s current stock price. 

With the combined financial support in-hand, the company stated it intends to advance its strategic growth plans, including immediate efforts to increase production to meet increasing demand for its products. 

“We are very pleased with the outcome of these transactions and the support they provide for Local Bounti’s growth ambitions,” said Kathleen Valiasek, CEO, Local Bounti. “We remain laser focused on identifying opportunities where we can utilize our flexible Stack & Flow Technology™ to deliver improved yields to meet the robust demand for locally grown and sustainable produce that we are seeing across our industry-leading distribution footprint.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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