Channel: Daily Bankrupt Company Updates | Bankrupt Company News
Viewing all articles
Browse latest Browse all 4593

Amyris, Inc. – Loss-Making Synthetic Biotech Company Files for Bankruptcy with Over $1.3bn of Liabilities as Combination of 20% Revenue Drop and Inflationary Pressures Leaves it Without Continued Access to Capital Markets


[Just filed. Developing story.] August 9, 2023 – Amyris, Inc. and seven affiliated debtors (Nasdaq: AMRS; together “Amyris” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case No. 23-11131 (Judge TBA). The Debtors, "a leading synthetic biotechnology company accelerating the world's transition to sustainable consumption through its Lab-to-Market™ technology platform and clean beauty consumer brands," are represented by James E. O'Neill of Pachulski Stang Ziehl & Jones LLP. Further Board authorized appointments include: (i) Fenwick & West, LLP to serve as corporate counsel, (ii) Philip J. Gund of Ankura Consulting Group, LLC to serve as Chief Restructuring Officer, (iii) PricewaterhouseCoopers LLP as financial advisors, (iv) Intrepid Investment Bankers LLC as investment bankers and (v) Stretto as claims agent.

The Debtors’ lead petition notes between 1,000 and 5,000 creditors; estimated assets between $500.0mn and $1.0bn; and estimated liabilities between $1.0bn and $10.0bn (the Debtors' latest 10-Q provides assets of $679.7mn and liabilities $1.328bn as at March 31, 2023). Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) U.S. Bank N.A. (as Trustee for $690.0mn of 1.5% Notes due 2026), (ii) Cosan US LLC ($10.8mn settlement agreement claim) and (iii) DB Ventures Limited ($7.2mn contingent/disputed trade claim). All 30 of the Debtors' top 30 unsecured creditors have claims at or above $1.0mn; with Shearman & Sterling; and Gibson, Dunn & Crutcher LLP each getting caught out as to professional services.

Petition Date Highlights 

  • Synthetic Biotech Company Files for Bankruptcy with Over $1.3bn of Liabilities
  • Loss Making Debtors See 20% Drop in Revenues Over Two Years Coupe with Inflationary Pressures; Accounting Investigation Ongoing
  • The DIP Credit Agreement Gives the Debtors 35 Days to Agree a Consensual Restructuring, Failure to Do So Will See Debtors Pivot to Asset Sales
  • Consumer Brands Business, However, to Go on Auction Block Regardless; with Debtors Set to Focus on "Core Business of Developing Molecules"
  • Prepetition Lender (and 29.9% Equity Holder) Foris (Owed $295.0mn of Principal in Respect of Senior Prepetition Loans) Set to Provide $190.0mn of New Money DIP Financing (12% Interest and 3% Exit Fee)

In a press release announcing the filing, Amyris stated that “it is moving forward with an operational and financial restructuring to further advance its ongoing strategic transformation and position the Company for long-term success.

The restructuring is intended to improve the Company's cost structure, capital structure, and liquidity position while streamlining Amyris' business portfolio to focus on its core competencies in R&D and the scale-up, commercialization, and applications development of its sustainable ingredients derived through biofermentation.

To facilitate the restructuring, Amyris and certain of its domestic subsidiaries commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the 

In tandem, to advance the Company's restructuring goals and maximize the value of its assets, Amyris is planning to exit its consumer brands and will begin marketing them for sale, with a view to having these brands continue to leverage Amyris' cutting-edge science and technology while under new ownership.”

Han Kieftenbeld, Interim Chief Executive Officer and Chief Financial Officer of Amyris, added: "Over the past months, we have been hard at work on a strategic transformation plan to reduce costs, improve operational effectiveness, and achieve sustainable growth. We believe the step forward our company has taken today puts us on the best path to address our financial challenges and achieve a comprehensive solution – rooted in Amyris' ground-breaking science, formulation capabilities, and technology….At the end of this restructuring process, we believe that Amyris will emerge as a financially stronger company with a more focused business model and well-defined path to profitability."

Goals of the Chapter 11 Filing

The Kieftenbeld Declaration (defined below) provides: "Through these Chapter 11 Cases, the Debtors seek to implement both an operational and balance sheet restructuring, address liquidity challenges, and preserve and maximize value for all stakeholders. In doing so, the Debtors expect to centralize their going-forward operations on their core business: developing molecules, manufacturing them at scale, and commercializing them with partners who are leaders in their markets. Accordingly, the Debtors plan to exit their consumer brands businesses, with a view to have these brands continue under new ownership while still leveraging Amyris’ cutting-edge science and technology. During the initial weeks of these Chapter 11 Cases, the Debtors will focus on negotiating a consensual restructuring with their key stakeholders. However, given the Company’s substantial cash burn, if the terms of a consensual restructuring cannot be agreed upon within the next thirty-five days, the proposed DIP financing contemplates that the Debtors will promptly seek to sell all or substantially all of their assets as a going concern through these Chapter 11 Cases.

Events Leading to the Chapter 11 Filing

In a declaration in support of first day filings (the “Kieftenbeld Declaration) [Docket No. 18], Han Kieftenbeld, the Debtors’ CRO, notes that the historically loss-making Debtors have seen their revenues "plunge more than 20%" over the last two years (no detail as to why provided), with their attractiveness to capital markets further damaged by inflationary pressures with the Company facing "manufacturing input, freight, and logistics cost increases as well as increased operating expenses, such as brand management and marketing expenses." Kieftenbeld also notes, again without providing details, that the Debtors are in the middle of an accounting investigation (related to "supply chain administration irregularities") which resulted in the dismissal of personnel and which may explain why the Debtors have yet to file a 10-Q for the second quarter. 

Kieftenbeld provides: "The Company has incurred operating losses since its inception, thus requiring a continuing need for equity and debt capital to sustain operations. Over the past two years, total revenues have plunged more than 20%; revenue in 2021 totaled $341.8 million and declined to $269.8 million the following year. During that same period, the Company faced manufacturing input, freight, and logistics cost increases as well as increased operating expenses, such as brand management and marketing expenses. At the end of 2022, the Company implemented a “Fit-to-Win” restructuring strategy that involved targeted price increases, production, shipping, and unit cost reductions and other cost-reduction strategies….These efforts have yielded mixed results. In May 2023, the Company announced its 2023 first quarter financial results, which showed a reduction in total revenue of $56.1 million as compared to $57.7 million in the first quarter of 2022, a 3% decrease. However, the Company remains challenged by an overleveraged balance sheet, continuing trade losses, mounting litigation risk, deeply unprofitable contracts, and dwindling trade vendor support.

Notably, Amyris’ two core businesses—Technology Access (comprising revenue from ingredient product sales, R&D collaboration programs, and technology licensing) and Consumer (brands and services)—continue to incur significant losses; each of the Company’s consumer brands are loss-generating and losses generated in the Technology Access business are principally a result of unfavorable margin economics in certain of the Company’s contracts.

Prior to the commencement of the Chapter 11 Cases, the Company became aware of allegations of potential supply-chain administration irregularities that may have resulted in accounting issues during the third quarter of 2021 through the fourth quarter of 2022. Upon being advised of the allegations, the Audit Committee of the Company’s Board of Directors engaged outside legal and forensic experts to undertake an investigation of the alleged irregularities. The investigation was not concluded as of the Petition Date. However, certain individuals that were involved in the alleged irregularities have been separated from the Company and there is no evidence that any of the alleged improper conduct is ongoing."

DIP Financing

The press release notes: "Amyris has secured a commitment from an entity affiliated with existing lender Foris Ventures for $190 million of debtor-in-possession ("DIP") financing to support continued day-to-day operations as the Company works with its key stakeholders to negotiate a consensual go-forward plan centered on Amyris' core capabilities. Subject to Court approval and the DIP budget, this DIP financing will provide liquidity to help fulfill commitments to the Company's valued employees, customers, partners, and vendors during the process." $70.0mn of the DIP financing (entirely new money) is to be made available with an interim DIP order with prepetition senior lender Foris (owed $295.0mn, plus fees and interest) set to earn 12% interest and a 3% exit fee.

Key Prepetition Shareholders

An August 3, 2023 Schedule 13D amendment has Foris holding 29.9% of the Debtors' equity.

About the Debtors

According to the Debtors "Amyris (Nasdaq: AMRS) is a leading synthetic biotechnology company, transitioning the Clean Health & Beauty and Flavors & Fragrances markets to sustainable ingredients through fermentation and the company's proprietary Lab-to-Market™ technology platform. This Amyris platform leverages state-of-the-art machine learning, robotics and artificial intelligence, enabling the company to rapidly bring new innovation to market at commercial scale. Amyris ingredients are included in over 20,000 products from the world's top brands, reaching more than 300 million consumers. Amyris also owns and operates a family of consumer brands that is constantly evolving to meet the growing demand for sustainable, effective and accessible products."

Amyris was originally incorporated in California in 2003 under the name Amyris Biotechnologies, Inc., before reincorporating in Delaware in 2010 under the name Amyris, Inc. The Company’s principal executive offices are located at 5885 Hollis Street, Suite 100, Emeryville, California 94608.

Amyris, Inc. is a Debtor in these Chapter 11 Cases and is the parent company of numerous direct and indirect subsidiaries organized in the United States, Brazil, and Europe. Each of the other Debtors is a Delaware entity that is a wholly owned7 subsidiary of Amyris, Inc. A corporate organizational chart depicting the Company’s legal entity structure, including Debtor and non-Debtor subsidiaries and joint ventures, is found below.

Corporate Structure Chart

Read more Bankruptcy News

The post Amyris, Inc. – Loss-Making Synthetic Biotech Company Files for Bankruptcy with Over $1.3bn of Liabilities as Combination of 20% Revenue Drop and Inflationary Pressures Leaves it Without Continued Access to Capital Markets appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.

Viewing all articles
Browse latest Browse all 4593

Latest Images

Trending Articles

Latest Images