Once Hailed as a Solution to the Global Plastics Scourge, PureCycle May Be Teetering
James Bruggers | March 7, 2023 | Inside Climate News
One of the most heralded advanced plastic recycling companies in the United States, PureCycle Technologies, has signaled that it could be in some serious financial trouble.
Late last week, PureCycle told regulators at the U.S. Security and Exchange Commission that it would miss its deadline for filing a 2022 annual report. In two SEC filings, the eight-year-old company revealed a potential default on $250 million in revenue bonds issued by a local development agency to finance construction of the company’s first flagship recycling plant, in Ohio.
PureCycle’s loan agreement with investors promised a Dec. 1 completion date for the plant, which the company says is almost finished, along the Ohio River in Ironton, 130 miles southeast of Cincinnati. The company reported that it was negotiating with bondholders on whether the delay means that a default will be declared on the bonds, and if so, whether the parties can reach an agreement on a revised timetable and other matters.
Since it rolled out its technology, developed by the Cincinnati-based consumer goods company Procter & Gamble, in 2017, PureCycle has cast itself as a pathbreaker in recycling polypropylene, a highly versatile and durable plastic found in everything from drink cups and yogurt tubs to car dashboards, coffee pods and clothing fibers. In addition to the Ironton plant, the company is constructing another recycling facility in Georgia and has announced one for South Korea.
PureCycle’s efforts are part of a push by industries that make and use plastics to develop new ways to address a global scourge of plastic waste that threatens public health and the environment, especially the world’s oceans.
But like other kinds of advanced recycling efforts that have struggled to get out of the gate, like the Brightmark plant in Indiana, or faced serious questions about their commercial viability, like the Encina plant planned for Pennsylvania, PureCycle has its own set of problems.
It fought allegations of fraudulent financial claims until it was cleared by an SEC investigation; encountered serious opposition to a feedstock preparation plant in Florida; lost a key source of feedstock and customers for its basic end product, worrying investors; and has been limited by the Food and Drug Administration in what kinds of plastic waste it can recycle into products that meet food safety standards. Then there are the construction delays at the Ohio plant, which PureCycle has blamed in part on the global coronavirus pandemic.
As of Monday, the Orlando, Florida-based company’s stock had fallen 40 percent since Jan. 23, from $9.36 per share to $5.56.
“They have a serious whack-a-mole problem here,” said Tom Sanzillo, director of finance for the Institute for Energy Economics and Financial Analysis, and a former New York state deputy comptroller. “Every time they fix something, something else goes wrong.”
“They are up to their neck in debt,” which is common for companies that are trying to expand, he said. “They are juggling a lot of balls and you don’t know how it’s going to land, but you see all these dynamics. They have a cumulative set of risks that are threatening the viability of the company.”
Christian Bruey, a spokesman for PureCycle, said the company would not comment.
