TerraVia Holdings Inc. (NASDAQ:TVIA), a food and ingredient company specializing in microalgae technology, is taking a pounding on Wednesday, with shares in a tailspin over the San Francisco-based company submitting documents to sell itself amid Chapter 11 bankruptcy proceedings.
TerraVia said that it entered a "stalking horse" agreement with Netherlands-based Corbion N.V. under which Corbion will acquire substantially all the assets of TerraVia for approximately $20.0 million in cash. Corbion, which trades on the Amsterdam Stock Exchange under the ticker CRBN, is a market leader in lactic acid and lactic acid derivatives, and a leading company in functional blends containing enzymes, emulsifiers, minerals, and vitamins.
With TerraVia constantly losing money from operations, Corbion told its shareholders that it expects the buyout to cost substantially more that the stalking horse bid. During the first quarter, TerraVia reported $4.52 million in revenue and a net loss of $22.6 million, or 23 cents per share.
A stalking horse bid is an initial bid from potential suitors as selected by a bankrupt company. Essentially, they're testing the water to see if others will step in and increase the bid and, at the same time, setting a bare-bones bottom price if no other company comes to the table.
The company also said it secured debtor-in-possession financing from holders of the majority of TerraVia's convertible debt. The financing will fund the company through its sale.
Shares sank on the BK news, falling to six cents for a loss of 66.7% from Tuesday's closing price of 20 cents. Shares have been nearly wiped out in 2017, losing about 95% of their value.
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