The indoor farming company that recently built a 3-acre warehouse in Pasco has secured $10 million in new funding from an existing investor and taken steps to reduce its debt, the company announced Aug. 4. 

Local Bounti’s funding comes in the form of a convertible note, a type of loan that can later be turned into company stock. This financial tool allows investors to loan money to a business with the option of converting the loan into shares at a future date, typically under agreed-upon conditions. 

In addition to the new capital, Montana-based Local Bounti also amended an existing loan agreement, commonly known as a credit facility, to lower its outstanding debt by $10 million. This means the company now owes less. 

“We are pleased to have the continued support of our financing partners to fuel our future success,” said Kathleen Valiasek, president, CEO and CFO of Local Bounti, in a statement. “This additional capital provided by an existing strategic investor, combined with the incremental debt reduction from our amended credit agreement, reinforces our balance sheet, positioning us well for continued operational strength ahead.” 

The convertible note has a five-year term and carries a 6% annual interest rate, which will be paid in kind, meaning the interest will be paid not in cash but in additional value, such as more shares or debt. 

As part of the deal, the investor will receive a warrant, which gives them the right to buy up to 550,000 shares of Local Bounti (NYSE: LOCL) stock at a fixed price of $0.125 per share.  

Local Bounti, founded in 2018, grows primarily living and loose leaf lettuce, arugula, spinach and basil and distributes its products to about 13,000 retail locations across 35 states.

Construction on the 244,101-square-foot Pasco greenhouse was completed last year, with operations beginning in the second quarter of 2024. The facility at 950 S. Elm Ave. sits on 28.3 acres of land and includes 3 acres under glass. Built with future expansion in mind, it includes a cold storage room for finished goods and a packaging room with processing equipment to package freshly harvested produce for store shelves.