It was supposed be a miracle on the prairies, turning plant proteins into delicious — depending on your taste — products such as vegan bacon, shrimp and ice cream..In 2019, Merit Functional Foods received almost $100 million in government-backed loans to build a state-of-the-art plant for extracting protein from peas and canola in Winnipeg that was announced with much fanfare from Prime Minister Trudeau himself..Less than four years later, the 94,000-sq.-ft. facility sits abandoned while receivers sort out a messy bankruptcy proceeding that will likely leave federal and provincial taxpayers on the hook for pennies on the dollar.. Vegan burgersA ‘delicious’ vegan meal could cost taxpayers $100 million. .The company’s liabilities include $10 million in a repayable contribution from Agriculture and Agri-Food Canada; $36 million in debt financing from Farm Credit Canada (FCC); and $58 million in debt financing from Export Development Canada. Its list of corporate partners included Swiss food giant Nestle and US-based food processor Bunge..Things went sideways almost from the get-go..The $65 million facility wound up costing $150 million by the time it was completed in 2021..Merit was expecting to process — and purchase — 100,000 tonnes of yellow peas and canola a year, but demand from manufacturers and its own branded protein shakes, plant-based seafood and ice cream never materialized..It wasn’t for lack of trying; the market for plant-based meat, which was worth about US$4 billion last year is expected to top $15 billion by 2030..On March 1st, a Manitoba judge threw the company into receivership. An April 30th deadline to find a buyer for the assets came and went after it was rejected by the courts. Multiple offers have been made to acquire the assets but so far none have been accepted..According to former CEO Ryan Bracken, the company became a COVID-19 casualty: borders were closed to essential services during start-up; commissioning a novel product took 12 times longer than expected; the price of raw materials doubled, and; potential customers’ R&D labs were shuttered for almost two years while investors dried up..Add in rising interest rates and it was a recipe for failure..“Sadly, while our proteins have been formulated into countless products globally, we couldn’t quite get to the level of cash flow needed to operate the business profitably, quick enough,” we wrote on LinkedIn following the bankruptcy. .“The current external environment is tougher now than ever before on start-ups. We started up prior to understanding the full impact of what COVID could do to our business plan.”.On Aug. 14, majority shareholder, Burcon NutraScience Corp., which owns Merit’s patents and intellectual property licences, reported second quarter revenue of 'nil' per share while it tries to secure financing and partners for its own buyout bid that was previously rejected by the court..Commenting on the receivership’s sales process, Kip Underwood, Burcon’s chief executive, said: “We are pleased to participate in the bidding process for the Merit facility. We firmly believe that Burcon’s technologies and process expertise are fundamental to the Merit facility’s future profitability.”.Burcon shares, which peaked at $6 on the Toronto Stock Exchange in 2021 when the Merit plant was commissioned, were trading at 16.5 cents on Monday.
It was supposed be a miracle on the prairies, turning plant proteins into delicious — depending on your taste — products such as vegan bacon, shrimp and ice cream..In 2019, Merit Functional Foods received almost $100 million in government-backed loans to build a state-of-the-art plant for extracting protein from peas and canola in Winnipeg that was announced with much fanfare from Prime Minister Trudeau himself..Less than four years later, the 94,000-sq.-ft. facility sits abandoned while receivers sort out a messy bankruptcy proceeding that will likely leave federal and provincial taxpayers on the hook for pennies on the dollar.. Vegan burgersA ‘delicious’ vegan meal could cost taxpayers $100 million. .The company’s liabilities include $10 million in a repayable contribution from Agriculture and Agri-Food Canada; $36 million in debt financing from Farm Credit Canada (FCC); and $58 million in debt financing from Export Development Canada. Its list of corporate partners included Swiss food giant Nestle and US-based food processor Bunge..Things went sideways almost from the get-go..The $65 million facility wound up costing $150 million by the time it was completed in 2021..Merit was expecting to process — and purchase — 100,000 tonnes of yellow peas and canola a year, but demand from manufacturers and its own branded protein shakes, plant-based seafood and ice cream never materialized..It wasn’t for lack of trying; the market for plant-based meat, which was worth about US$4 billion last year is expected to top $15 billion by 2030..On March 1st, a Manitoba judge threw the company into receivership. An April 30th deadline to find a buyer for the assets came and went after it was rejected by the courts. Multiple offers have been made to acquire the assets but so far none have been accepted..According to former CEO Ryan Bracken, the company became a COVID-19 casualty: borders were closed to essential services during start-up; commissioning a novel product took 12 times longer than expected; the price of raw materials doubled, and; potential customers’ R&D labs were shuttered for almost two years while investors dried up..Add in rising interest rates and it was a recipe for failure..“Sadly, while our proteins have been formulated into countless products globally, we couldn’t quite get to the level of cash flow needed to operate the business profitably, quick enough,” we wrote on LinkedIn following the bankruptcy. .“The current external environment is tougher now than ever before on start-ups. We started up prior to understanding the full impact of what COVID could do to our business plan.”.On Aug. 14, majority shareholder, Burcon NutraScience Corp., which owns Merit’s patents and intellectual property licences, reported second quarter revenue of 'nil' per share while it tries to secure financing and partners for its own buyout bid that was previously rejected by the court..Commenting on the receivership’s sales process, Kip Underwood, Burcon’s chief executive, said: “We are pleased to participate in the bidding process for the Merit facility. We firmly believe that Burcon’s technologies and process expertise are fundamental to the Merit facility’s future profitability.”.Burcon shares, which peaked at $6 on the Toronto Stock Exchange in 2021 when the Merit plant was commissioned, were trading at 16.5 cents on Monday.
