[NEW YORK] Beyond Meat raised US$100 million in debt financing from a plant-based diets advocate, as the company continues to search for funds to shore up its liquidity.
The lender, Unprocessed Foods, is an affiliate of Ahimsa Foundation, an organisation “focused on advocating for plant-based diets”, the plant-based meat supplier said on Wednesday (May 7) when it reported earnings that missed analysts’ estimates. The same foundation also provided US$16 million capital to help out the maker of plant-based eggs Eat Just nearly two years ago.
“The overall macro environment is challenging for alt-protein, but we are confident of the leadership and the outlook,” said Shaleen Shah, president at Ahimsa Foundation in response to a Bloomberg News inquiry. “This is the right side of the history. The way animals are grown and processed is unsustainable and alt-protein is the way forward.”
Ahimsa has made numerous investments across the vegan food spectrum, he added.
Beyond Meat had been in discussions with private credit lenders to raise as much as US$250 million, Bloomberg reported in February, after a previous attempt last year was unsuccessful.
The El Segundo, California-based producer of meat substitutes faces the maturity of a US$1.15 billion of convertible bonds in 2027. The company, which has about US$116 million of cash and cash equivalents as at the end of March, will continue to “evaluate potential transactions” to address the debt, it said on Wednesday.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The senior secured delayed draw term loan has an initial interest of 12 per cent in so-called “payable in kind” form, which allows the company to preserve cash as it does not have to pay interest periodically but instead it accumulates to be repaid when the principal is due. The maturity could be extended until 2035, but amounts drawn after 2030 would pay 17.5 per cent interest, chief financial officer Lubi Kutua said in the call with analysts.
Beyond Meat also offered the lender rights to purchase up to 12.5 per cent of its shares, according to a regulatory filing on Wednesday. The exercise price will range between US$2 to US$3.75. Its shares fell 5.1 per cent at 6.14 pm in extended trading in New York. The stock has declined 32 per cent so far this year to Wednesday’s close.
Consumer caution
The loan from Ahimsa comes as the company reported an increasingly dimmed revenue outlook.
First-quarter revenue of US$68.7 million fell short of the average analyst estimate, with US retail volume declining 23 per cent from a year earlier. The company attributed this to “weak category demand”.
The plant-based meat supplier withdrew its full-year outlook, citing “elevated levels of uncertainty within its operating environment”. It now projects second-quarter revenue in a range of US$80 million to US$85 million.
Consumer caution is eating into grocery spending as consumers pull away from expensive meat alternatives. Food inflation is at the highest level on record, while the University of Michigan Consumer Sentiment Index is at its third-lowest reading ever at 52.2.
Beyond Meat’s products remain more expensive than the animal proteins they are competing with. BLOOMBERG
