Blue Apron Holdings Inc. plans to use the proceeds of two capital infusion moves to pay off its existing term loan and for general corporate purposes, allowing it to stay focused on its long-term sustainable growth plan and continue to execute on its turnaround strategies.
The meal kit company entered into agreement for a new $40.0 million private placement investment by RJB Partners LLC, an affiliate of Joseph N. Sanberg, a long-time investor in the company and a leading investor in climate positive companies. Blue Apron president and CEO Linda Findley also plans to invest $500,000 in a private placement at $12 per share.
Blue Apron will refinance its existing debt with $30.0 million of senior secured notes issued to clients of Allianz Global Investors — which will be used to pay off its current debt facility — and extend debt maturity to 2027. The debt with clients of Allianz is subject to the entry into a definitive agreement and other closing conditions.
Under the terms of the equity purchase agreements, on April 29 Long Live Bruce LLC, an affiliate of Sanberg (which was assigned RJB Partners’ rights to purchase the initial $20 million of Class A common stock) purchased 1,666,666 shares of Class A common stock, and Findley purchased 41,666 shares of Class A common stock, in each case at a purchase price of $12 per share. Under the purchase agreements, the company has agreed to provide each of RJB Partners and Findley with certain customary registration rights with respect to the securities purchased in the private placements. The remaining $20.0 million investment from RJB Partners, also to be made at $12 per share, is expected to close on May 30, subject to the completion of refinancing of the company’s outstanding debt and other customary closing conditions.
After the company made its capital infusion public on the morning of May 2, Blue Apron experienced a surge in its stock, but analysts report that the company’s stock is still down approximately 40% year to date.
Meanwhile, Blue Apron leadership is optimistic about the company's future. “I am pleased to be investing additional equity into a business that I believe has great potential from a strategic and purpose-driven perspective,” said Findley. “We also view this planned debt refinancing as a smart, strategic move during a time of rising interest rates. Upon closing the new debt, we expect to repay our existing debt, which will move our debt maturity five years out to 2027 and lower our overall debt service obligations, giving us the horizon to focus on executing our plans. The proceeds from the closed transactions and expected additional debt and equity fundings support our continued turnaround as we drive towards long-term sustainable and profitable growth.”
To help increase awareness and drive additional customer engagement, Blue Apron recently rolled out a new national brand campaign, its first since 2018.The new advertising spots highlight the benefits of cooking with Blue Apron, from creating meals with quality ingredients to easing the burden of menu and recipe planning. The company also broadened its customer base by adding quick breakfast recipes to its meal solutions in March.
Sanberg expressed his support for Blue Apron as it continues to execute on its strategy. "Blue Apron's plan is focused on driving growth in a conscious way that speaks to consumers looking for values-aligned products and capitalizing on their brand that is ubiquitous with meal kits and recognized by a majority of Americans,” he said. “I believe that their commitment to doing right by the planet and their customers through sustainable sourcing, packaging and a goal of net- zero status is aligned with consumers and investors alike in driving a great business for the future."
Last month, Blue Apron said that it met its commitment to become carbon neutral by March 31, 2022, offsetting Scope 1, Scope 2 and Scope 3 emissions as defined by the Greenhouse Gas Protocol.Blue Apron achieved its goal through the purchase of carbon offsets, based on an initial carbon footprint analysis conducted by financial services business Aspiration. The carbon credits were purchased from Aspiration, and cover estimated upstream and downstream emissions that range from sourcing, packaging and transporting Blue Apron’s products. The company is now working toward implementing systematic reductions designed to achieve a longer-term goal of attaining net-zero status.
Launched in 2012, New York-based Blue Apron offers fresh, chef-designed recipes with responsibly sourced ingredients. According to its 2021 yearly report, the company bolstered its net revenue by 2% over 2020, moving to $470.4 million from $460.6 million. However, adjusted EBITDA for 2021 was a loss of $39.2 million, a decline that the company attributed to its fourth-quarter investments in growth strategies. Blue Apron will release its first-quarter 2022 financial results on May 9.