Kentucky-based AppHarvest and Novus Capital Corp. (NASDAQ: NOVS) have agreed to form a business combination that will result in AppHarvest becoming a publicly traded company. Novus is a special purpose acquisition company (SPAC, or more colloquially, a blank-check company). Once the transaction is completed, Novus will be renamed AppHarvest and trade on the Nasdaq under a to-be-determined new ticker symbol.

The business combination values AppHarvest at $1 billion, following a private investment in public equity (PIPE) stock offering at $10 per share. AppHarvest will realize $475 million in gross proceeds and about $375 million in unrestricted cash once the transaction closes. AppHarvest also has issued a $30 million convertible note to Inclusive Capital to acquire operating capital until the transaction closes. The note will convert to shares of common stock when the transaction closes.

AppHarvest is developing a large-scale, efficient indoor farm in a “water-rich region [of Appalachia] strategically located within a day’s drive of approximately 70% of the U.S. population.” The firm’s first farm is a 60-acre controlled environment facility in Morehead, Kentucky, and the company’s first harvest (tomatoes) is expected in early 2021. The announcement notes that 60% of all fresh tomatoes available in U.S. stores are imported.

Novus came public on May 19, raising $100 million by selling 10 million units at $10 apiece. Each unit included one share of common stock and one warrant entitling the purchaser to acquire an additional share of stock at a price of $11.50 per share.

The company also sold 3.25 million private warrants at $1 apiece in a private placement to Novus’s founding stockholders and to underwriter EarlyBird Capital. The company’s founders also purchased 2.875 million shares of founder’s stock in March of 2020 for a total price of $25,000. Of that founders’ stock, 375,000 shares were forfeited when EarlyBird Capital declined to exercise an overallotment option.

Of the remaining 2.5 million founders’ shares, the initial shareholders have agreed to lock up 50% for at least one year or until the price of the stock reaches $12.50 for 20 consecutive days. The other 50% is locked up for one year or earlier if, after a combination, Novus completes a transaction that gives all its shareholders the right to exchange their shares of common stock for “cash, securities, or other property.” The reverse merger with AppHarvest is such a transaction.

According to Crunchbase, AppHarvest has raised $142.3 million in six venture rounds, the latest in August raising $28 million. The company also recently added Martha Stewart, J.D. Vance (author of Hillbilly Elegy) and Impossible Foods’ CFO David Lee to its board of directors.

AppHarvest’s founder and CEO, Jonathan Webb, commented, “We now know that, to build a more resilient food system that meets our growing population demands, we must immediately start building controlled environment agriculture facilities, as these farms use far fewer resources to grow far more produce.”

Bob Laikin, board chair of Novus Capital, added: “With significant tailwinds from heightened investor focus on ESG initiatives and the secular shift to plant-based foods, we believe AppHarvest is well-positioned to execute on its strategy for rapid growth and value creation.”

While AppHarvest has a lot to offer, it is worth noting that the company’s business requires substantial amounts of capital. Building massive greenhouses is not cheap. But then, neither are really tasty tomatoes.

The transaction is expected to close late in the fourth quarter or early in the first quarter of 2021.

Novus’s shares traded at $13.30 in Tuesday’s premarket session, up nearly 32%.

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