According to a filing with the U.S. Bankruptcy Court for the District of Delaware, DAK Americas LLC is the stalking horse bidder for CarbonLite’s Reading, Pennsylvania, polyethylene terephthalate (PET) recycling plant. CarbonLite filed for bankruptcy protection in March.
A stalking horse bid sets the floor price for bids on the facility, which CarbonLite started up in late 2020.
According to the filing, the debtors intend to provide bid protections to DAK that include a breakup fee of $2.88 million, which is equal to 3 percent of the $96 million price set forth in the agreement, and up to $350,000 in expenses incurred by the company in connection with its bid.
Objections to the bid had to be filed before May 6 at 4 p.m.
An auction is planned for May 17 at 10 a.m. Eastern time, and a sales hearing is scheduled for May 26 at 3 p.m. The sale should close on or before June 3, according to the court filing.
Los Angeles-based CarbonLite Holdings LLC has described the Reading plant as “the largest stand-alone bottle-to-bottle recycling facility in the world,” with the ability to process 140 million pounds of postconsumer PET, which is the equivalent of 2.5 billion bottles, producing 90 million pounds of food-grade rPET pellets annually.
The company says it spent $80 million on the 270,000-square-foot Reading plant, which is about 30 miles from Allentown, Pennsylvania, in the eastern part of the state.
CarbonLite’s Pennsylvania facility supplied rPET to Nestle Waters North America, Coca-Cola, Keurig Dr Pepper and PepsiCo, all of which have locations in nearby Allentown.
According to the filing, CarbonLite “unilaterally changed the pricing charged to Coca-Cola under its contracts, which pricing changes Coca-Cola accepted and continued to purchase under such terms.” However, Coca-Cola stopped purchasing from CarbonLite in March.
CarbonLite also changed pricing for Nestle Waters North America, which is now owned by BlueTriton, though the filing notes that the company accepted the changes and continues to purchase material from CarbonLite.
The rPET supplier also changed its pricing with Niagara Bottling LLC, though Niagara did not accept the changes and has not had a business relationship with CarbonLite since March, court documents show.
"We can confirm that the Pennsylvania facility will be auctioned but cannot comment on a pending sale," CarbonLite CEO Leon Farahnik says in a statement shared with Recycling Today. "However, we can say that no layoffs are planned. In fact, we are in the process of hiring more employees in Pennsylvania. Again, we are working to ensure that CarbonLite emerges from reorganization positioned for a robust and enduring future.”
DAK purchased the Perpetual Recycling Solutions Richmond, Indiana, PET recycling plant in 2019 and recently invested $32 million to upgrade the plant.
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