Wide Open Agriculture (WOA) has signed a binding conditional MoU to sell its retail brand, Dirty Clean Food (DCF), to CEO Jay Albany’s holding company, DCF Global. Albany will resign as WOA’s CEO immediately, after 15 months in the role. CFO Matthew Skinner will act as interim CEO.
The deal is conditional on the transfer of all of DCF’s assets, Albany securing working capital finance, and WOA shareholders approving the deal.
DCF is a regenerative ethical food brand, selling regeneratively grown produce and meat through its website to consumers and multichannel platform to wholesalers, retailers, and restaurants. The $1.5 million sale price represents the net asset value of DCF.
WOA said it was a “significant corporate development” as it transitions into a fully integrated plant-based protein ingredients company.
WOA chair Anthony Maslin said there had been discussions with potential buyers, but it became clear Albany was “the right person to take DCF into the next chapter”.
“His passion for the business is unparalleled and his experience in delivering in this area is proven both in DCF but also previously in New York with Max Delivery,” Maslin said.
Albany said, “I’m proud of the progress made in our lupin business to advance a capex light pathway to commercialisation, while building an elite global network of prospects and partners. WOA is in great hands with CEO Matthew Skinner and COO Miranda Stamps leading the commercial path forward for our ground-breaking lupin protein program.”
The consideration
The $1.5 million (consideration) must be paid within five years of completion, with $500,000 payable within the first three.
If DCF’s cash outflow exceeds $150,000 between the MoU and completion date, the consideration will be increased by the amount of cash expended during the period that is above that amount. If DCF’s cash burn is less than $150,000, there will be no increase to the consideration.
Payments required until the consideration is paid in full are:
- 10% of any annual DCF net income (after tax profits) of DCF;
- 10% of any net cash proceeds for equity raised by DCF over $1 million;
- 10% of any net cash proceeds from the liquidation and disposal of agreed inventory; and
- 50% of any repayment from Grow Hub after settlement and legal fees.
All DCF IP will be owned by WOA and licensed exclusively to DCF. After the consideration has been paid in full, DCF will pay a license fee of five per cent of annual net income to WOA to maintain rights to the DCF brand, trademark, and all related IP.
WOA to focus on lupin-based ingredients
WOA said it will now focus its resources on researching, manufacturing, and supplying high performance lupin-based ingredients to global food manufacturers.
According to WOA its flagship product Buntine Protein is a more sustainable and adaptable alternative to traditional soy and pea proteins, offering a large commercial opportunity to replace and improve products that currently rely on conventional plant proteins.
The sale of DCF is expected to reduce cash burn, improve sales, accelerate profitability, and streamline operations, WOA said.
Production of Buntine Protein has started in the German operations that WOA purchased last year, and the revenue from this will, over time, drive profitable revenue growth for the company.
Interim CEO Matthew Skinner said, “The decision to sell the operations of DCF, a venture that generated more than $11 million in revenue in FY23, underscores our confidence in the enormous potential of Buntine Protein. This shift allows us to transform into a more streamlined and focused entity, singularly dedicated to one ambitious goal – to replace all traditional plant-based proteins with Buntine Protein.”
The divestment will mainly impact WOA’s immediate short term revenue stream. WOA said it was comfortable the impact on WOA’s revenue would be remedied by the commercialisation of Buntine Protein and the refocusing of its resources and capital into the production of plant-based proteins.
