Burcon NutraScience Corp (TSX:BU, NASDAQ:BRCN) has provided an update on the production progress and funding of its joint venture (JV), Merit Functional Foods Corporation.
Burcon said it has advanced $947,867 to Merit, representing its share of the $3 million financing provided by all the JV’s shareholders in proportion to their equity interest in Merit.
The financing addresses anticipated liquidity requirements of Merit as it continues to ramp up production and sales at its state-of-the-art pea and canola protein production facility.
"The commitment of all Merit shareholders is reflected in the financing announced today," Peter H. Kappel, Burcon's interim CEO and chairman of the board said in a statement.
READ: Burcon NutraScience reports first quarter sales of C$2.3M
The Merit loan has a term of 15 years, will initially be non-interest-bearing and have terms that are similar to previously advanced shareholder loans. The loan is subordinated to any indebtedness owed by Merit to each of its financial lenders, whether secured or unsecured.
Burcon said Merit has made “marked improvements” in production throughput and yield of its unique pea and canola protein ingredients, adding that production issues arising fine-tuning and optimization measures last quarter have largely been resolved.
In addition, Merit has successfully implemented its new Peazazz C process and is on the path to reaching higher production and sales levels in the current and future quarters, with the goal of reaching continuous and consistent production, it added.
"We are pleased to see so many things going in the right direction at Merit including production improvements, new sales orders for the original product SKUs and in particular, we are excited about Merit's latest Peazazz C product and believe it can displace many other pea proteins on the market today," Kappel added.
Contact the author at jon.hopkins@proactiveinvestors.com