Netherlands-based biotechnology company Corbion NV has won approval to pay $20 million for TerraVia Holdings Inc., once a highflying pioneer that promised to transform algae into fuel.
Judge Christopher Sontchi approved the sale at a hearing Friday in TerraVia’s bankruptcy case. Approval from the judge clears the way for Corbion to add TerraVia’s algae-based technology to a portfolio that includes products to prevent food spoilage and chemicals derived from sustainable sources.
TerraVia’s aspirations to become a biofuels giant never panned out. The San Francisco-area company struggled to get its algae-based consumer business into successful commercial operation.
After going public in 2011, TerraVia stacked up losses, ringing up an accumulated deficit of $734 million as of the end of March, according to a filing with the Securities and Exchange Commission. TerraVia’s stock was delisted after the Aug. 2 bankruptcy filing.
Once known as Solazyme and backed by Sir Richard Branson and other advocates of clean technology, or clean tech, TerraVia gained ground as a promising startup intent on delivering biofuel made from algae. It also became a food, nutrition and specialty-ingredients company, developing algae-based products for consumer use. Last year, TerraVia switched to focus on the food and consumer lines of business.
By the time it filed for bankruptcy in August, TerraVia was low on cash, having failed to rapidly commercialize and profit from its algae-based food product lines. It had a “stalking horse” offer from Corbion for the bulk of its business, and other contenders that showed up at a bankruptcy auction failed to beat Corbion’s offer.
TerraVia raked in significant tax dollars in its clean tech heyday, a factor that snarled Friday’s sale hearing in the U.S. Bankruptcy Court in Wilmington, Del. The U.S. government backed Solazyme’s technology with contracts and grants, and the company did work for the Energy Department and the Defense Department.
Justice Department lawyer Ellen Slights protested that it was difficult for the government to make sure contracts that implicate U.S. federal interests weren’t on the list of assets being sold.
Corbion had agreed to leave behind any U.S. government-related contracts, but Ms. Slights said sorting through TerraVia’s research and development pacts to ascertain whether federal interests were tied up in them was a challenging task. TerraVia inserted a clause providing that any agreement with federal interest wouldn’t be included in the deal.
Last year, TerraVia sold 80% of its Algenist cosmetic and skin-care brand to Tengram Capital Partners for $18.8 million, plus stock. At the auction, Tengram picked up the 20% TerraVia still owned, for $900,000.
Sale proceeds will fall far short of the more than $170 million TerraVia owes bondholders. Once the sales are closed, TerraVia will file a chapter 11 plan setting out how its assets will be distributed among creditors.
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(END) Dow Jones Newswires
September 15, 2017 17:03 ET (21:03 GMT)
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