Transaction Valued up to $50 Million with
Approximately $25 Million of Upfront Cash Received
Blue Apron Eliminates Its Debt and Continues to
Drive Additional Cash Burn Reduction Initiatives
Blue Apron (NYSE: APRN) closed its previously announced
transaction with FreshRealm. Under the definitive agreements
entered into today, Blue Apron transferred its operational
infrastructure to FreshRealm, including fulfillment centers,
equipment, know-how and related personnel. Blue Apron received
approximately $25 million of upfront cash, subject to certain
adjustments, and is eligible to receive up to $25 million of value
upon the achievement of certain milestones.
Blue Apron is now an asset-light company, focused on the growth
of its direct-to-consumer business. The Company plans to continue
to build its strong brand and deliver the high-quality products its
customers have come to love. In addition, Blue Apron expects to
accelerate the expansion of its product offerings, including the
addition of new convenient options.
With a portion of the proceeds of the transaction, Blue Apron
also completed the repayment of all its outstanding senior secured
notes. With this payment, Blue Apron eliminated its debt.
In moving to an asset-light model, Blue Apron plans to execute
further streamlining of its business, which includes reduced
headcount and administrative costs, and drive additional cost
savings and continued year-over-year cash burn reduction beyond the
initiatives disclosed in December 2022.
With the ability to focus on the brand, marketing, product and
consumer experience, Blue Apron expects to be more agile, which
will facilitate faster decision making, enhance its balance sheet
and reduce PTG&A costs. The Company believes this will allow it
to get to profitability quicker.
Blue Apron plans to provide an update on its profitability goals
and future plans on its second quarter 2023 earnings call.
Transaction Details
Under the definitive agreements for the transactions, Blue Apron
sold to FreshRealm the assets and business related to its
operational infrastructure, in exchange for (i) approximately $25
million of cash upfront, subject to adjustment for certain
liabilities, (ii) a $3.5 million note payable by FreshRealm to Blue
Apron, which is subject to offset for certain indemnification
obligations, (iii) a $4 million contingent cash payment,
conditioned on achievement of certain operational and financial
milestones by Blue Apron, and (iv) up to an additional $17.5
million in rebates against payments under the production and
fulfillment agreement that can be earned by Blue Apron for volume
based on meal kits ordered by customers and new product
initiatives.
Blue Apron and FreshRealm also entered into a production and
fulfillment agreement with an initial term of 10 years, under which
FreshRealm will be the exclusive supplier of Blue Apron’s meal
kits.
In addition, Blue Apron and FreshRealm entered into license
agreements, under which Blue Apron licensed to FreshRealm certain
rights regarding the ability to use the Blue Apron brand in certain
retail channels and the right to use certain Blue Apron
software.
In connection with the closing of the transactions, Blue Apron
entered into subleases with FreshRealm for its Richmond, California
and Linden, New Jersey facilities.
Blue Apron issued to FreshRealm a warrant to purchase shares of
Blue Apron common stock representing 19.9% of the Company’s
outstanding common stock, with an exercise price of $0.01 per
share. Blue Apron agreed to grant to FreshRealm certain
registration rights with respect to the warrant shares, and
FreshRealm agreed to an 18-month lockup, subject to certain
exceptions.
The transactions were approved by the Board of Directors of both
companies.
About Blue Apron
Blue Apron’s vision is Better Living Through Better Food™.
Launched in 2012, Blue Apron offers fresh, chef-designed meals that
empower home cooks to embrace their culinary curiosity, challenge
their abilities in the kitchen and see what a difference cooking
quality food can make in their lives. Blue Apron is focused on
bringing incredible recipes to its customers, deepening its
commitment to its employees, continuing to reduce food and
packaging waste, and addressing its carbon impact. Visit
blueapron.com to learn more.
Forward Looking Statements
This press release includes statements concerning Blue Apron
Holdings, Inc. and its future expectations, plans and prospects
that constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. For this
purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. In
some cases, you can identify forward-looking statements by terms
such as "may," “will,” "should," “would,” "expects," "plans,"
"anticipates," "could," "intends," "target," "projects,"
"contemplates," "believes," "estimates," "predicts," "potential,"
or "continue," or the negative of these terms or other similar
expressions. The forward-looking statements in this press release
are only predictions. Blue Apron has based these forward-looking
statements largely on its current expectations and projections
about future events and financial trends that it believes may
affect its business, financial condition and results of operations.
These forward-looking statements speak only as of the date of this
press release and are subject to a number of risks, uncertainties
and assumptions including, without limitation, the sufficiency of
Blue Apron’s cash resources and its ability to continue to operate
as a going concern if Blue Apron is unable to realize the
anticipated benefits from identified, or to be identified, expense
reductions or incur unforeseen additional cash expenses; Blue
Apron’s ability to successfully execute its business without its
fulfillment and production assets; the ability of Blue Apron to
successfully and efficiently transition its fulfillment and
production assets to FreshRealm; the ability of FreshRealm to
continue to fulfill Blue Apron’s meal-kit products in a manner
consistent with Blue Apron’s brand standards, if at all; Blue
Apron’s ability to achieve the anticipated benefits of the
FreshRealm transaction for Blue Apron’s stockholders; Blue Aprons’s
ability, including the timing and extent, to successfully support
the execution of its strategy; the Company’s ability to
cost-effectively attract new customers and retain existing
customers (including on the one hand, its ability to execute its
marketing strategy with a reduced marketing budget, or on the other
hand, its ability to sustain any increase in demand the Company may
experience), and its ability to continue to expand its product
offerings and distribution channels; Blue Apron’s ability to
maintain the value of its brand; harm to our brand and reputation
as the result of real or perceived quality or food safety issues
with our products; food safety and food-borne illness incidents and
associated lawsuits, product recalls or regulatory enforcement
actions; Blue Apron’s expectations regarding, and the stability of,
its supply chain, including potential shortages, interruptions or
continued increased costs in the supply or delivery of ingredients
to FreshRealm, and parcel and freight carrier interruptions or
delays and/or higher freight or fuel costs, as a result of
inflation or otherwise; Blue Apron’s ability to respond to changes
in consumer behaviors, tastes and preferences that could lead to
changes in demand, including as a result of, among other things,
the impact of inflation or other macroeconomic factors, and to some
extent, long-term impacts on consumer behavior and spending habits,
any material challenges in employee recruiting and retention, any
prolonged closures, or series of temporary closures, of one or both
fulfillment centers to be operated by FreshRealm, supply chain or
carrier interruptions or delays, and any resulting need to cancel
or shift customer orders; Blue Apron’s reliance on FreshRealm to
maintain food safety and prevent food-borne illness incidents and
its susceptibility to supplier-initiated recalls; and other risks
more fully described in the Blue Apron’s Annual Report on Form 10-K
for the year ended December 31, 2022 filed with the Securities and
Exchange Commission on March 16, 2023 and Blue Apron’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2023 filed with
the Securities and Exchange Commission on May 4, 2023 and in other
filings that Blue Apron may make with the Securities and Exchange
Commission in the future. Blue Apron assumes no obligation to
update any forward-looking statements contained in this press
release, whether as a result of any new information, future events,
or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20230609005233/en/
Muriel Lussier Blue Apron muriel.lussier@blueapron.com
Blue Apron (NYSE:APRN)
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