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Sunday Wrap-Up: Consolidation Continues
Discover every Sunday a complete wrap-up of the week in the indoor farming sector.
Good morning readers, consolidation continues, new deals signed, and new facilities announced for 2023.
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Indeed during the week, although the precise numbers have not yet been determined, Infarm declared that around 500 individuals, or half of its staff, would be leaving the firm. Since Infarm does not view the UK, France, or the Netherlands as important markets, operations there will likely be reduced. The Listing Qualifications Staff of NASDAQ notified Kalera that a delisting action would be implemented, and Kalera then declared that its German subsidiary will undergo a reorganization under judicial supervision.
Here is Sunday’s wrap-up!
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First, Infarm announced that about 500 employees (half of its workforce) will leave the company even if the exact numbers are yet to be determined. This follows another workforce reduction announced in recent weeks as reported by Sifted.eu. The main reasons for the changes were: Energy prices escalated (doubled in Europe), inflation rates, and supply chain disruptions.
"We see that Infarm cannot endure the harsh market conditions in our existing configuration, notably with regard to rising energy prices and difficult financial markets. To make our firm viable and keep advancing our long-term purpose, we must modify our aggressive growth plans and boost our efficiency.” They declared.
The company now plans to focus on consolidating its capacity in its growing centers in Frankfurt, Copenhagen, and Toronto where the company has strong retailer relationships and secured contracts of significant volume ensuring a path to profitability in 2023. Operations in the UK, France, and the Netherlands are set to be downsized as they are not considered core markets by Infarm.
“As you know, infarm has already been adjusting our operations this year, including consolidating production sites, inStore farm clusters, and reducing our workforce. However, these measures assumed a quick market recovery, and we must admit that our assessment was too optimistic. We take full responsibility for that. Based on the data we have today, we are forecasting slower growth caused by a significant downturn. We grew our teams to support a global growth strategy, but today, it is clear that consolidation and a focused growth mindset are required to overcome the challenges.” the company mentioned.
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In other news, last week, Kalera received a notice from the Listing Qualifications Staff of NASDAQ indicating that a delisting procedure would be enacted as not only has Kalera’s shares been trading under a USD 1.00 a share for more than 30 consecutive trading days but it has been trading under 10 cents a share for 10 consecutive trading days which is against the listing rules set out by NASDAQ. The company requested an appeal of the delisting determination by requesting a hearing before the Panel.
Over the past few weeks, the company entered a restructuring program in order to decrease its cash-burn rate and improve its financial statements but consecutive poor quarters added to the current macroeconomic event led investors to short their position in the company. Shortly after receiving the notice, its stock appreciated above the 10 cents mark currently trading at 12 cents a share at closing on Friday 25th.
Nonetheless, the company had also to recall its produce because of possible health risks linked to Salmonella infections detected earlier in November.
This morning, the company announced entering a restructuring process of its German subsidiary through a court-supervised process to align with its commitment to decreasing its cash-burn rate as quickly as possible. As per the company’s statement, Kalera GmbH received interest from external investors, though no agreements have been signed to either acquire or invest. The company expects that divesting its international assets, its seeds company, and part of its U.S. headquarters will contribute to decreasing the operational costs by 50%.