Roth CH Acquisition to acquire PureCycle Technologies

PureCycle Technologies LLC, Orlando, Florida, and Roth CH Acquisition, an acquisition company backed by Roth Capital Partners and Craig-Hallum Capital Group, have entered into a merger agreement.

According to an investor presentation from Roth CH Acquisition, the companies aim to complete the merger of PureCycle into Roth CH's portfolio by the first quarter of 2021. After the transaction closes, a parent company of PureCycle will issue an initial public offering (IPO). Upon closing, the created holding company will be renamed PureCycle Technologies Inc. and will be listed on the Nasdaq Capital Market under the new ticker symbol PCT.

Roth CH Acquisition also has entered into definitive purchase agreements for a $250 million common stock PIPE transaction, which is also expected to close in the first quarter of 2021.

PureCycle Technologies has a license to commercialize solvent-based recycling purification technology for restoring polypropylene (PP) scrap into virgin-like resin. The company’s recycling process was developed by Procter & Gamble and commercialized by PureCycle. The company says its ultra-pure recycled polypropylene (UPRP) has similar properties to virgin PP.

According to a statement from Roth CH Acquisition and PureCycle regarding the transaction, strong interest and global awareness of PureCycle has resulted in strategic investments and offtake agreements with companies including Aptar, BMW i Ventures, Closed Loop Partners, Wasson Enterprise, Glockner Enterprises, L’Oréal, Milliken & Co., Procter & Gamble, Ravago and Total. As a result, PureCycle has contracted pricing for its UPRP that is delinked from commodity pricing and at a premium to virgin PP resin. Combined with its PP scrap feedstock, PureCycle says it expects to achieve earnings before interest, taxes, depreciation and amortization margins in excess of 50 percent from the company’s first seven plants that are expected to be running by 2024.

The company is building its first commercial-scale plant in Ironton, Ohio, which is expected to have 107 million pounds of capacity per year when it’s fully operational. Production in Ironton is expected to start in late 2022, with full capacity expected to be achieved by 2023.

PureCycle raised about $250 million in a tax-exempt municipal bond offering in October to fund the construction of its Ironton facility.

Additionally, PureCycle reports that it plans to build new recycling production facilities globally, with the goal of having 30 commercial lines operational by 2030 and 50 by 2035. The company says it expects to announce its next location in Europe and to begin production in 2023 with a nameplate capacity of about 107 million pounds when fully operational. Additional expansion in the U.S. is expected to include five scaled-up commercial lines capable of producing more than 165 million pounds each of its UPRP. PureCycle says it expects that production from the Ironton, Europe and other sites will bring more than 1.2 billion pounds of annual recycled PP to the market in the next five years.

“This transaction represents a key milestone in PureCycle’s mission to transform polypropylene into a recyclable and sustainable product,” says Mike Otworth, CEO of PureCycle. “Our recycling process produces virgin-like resin that we believe is suitable for high-value, food-grade consumer products, and we believe we are well-positioned to meet the consumer demand for recycled content as well as global sustainability mandates. The proceeds of this transaction are intended to provide us with the balance sheet strength to accelerate the global rollout of our proven technology addressing the immense global problem associated with polypropylene waste. The current global challenges surrounding polypropylene waste are significant. Of the approximately 170 billion pounds of polypropylene waste produced annually, less than 1 percent is recycled today; the remainder largely ends up in landfills and the ocean, creating a massive environmental problem. We look forward to partnering with the Roth CH team on an efficient, accelerated path for a successful public listing.”

Byron Roth, chairman and CEO of Roth CH, says, “We searched for a business combination that would not only be a compelling growth company but could also benefit from the relationships and experience of our two growth investment banks. We believe PureCycle’s technology will be transformative in plastic recycling and help companies meet their sustainability goals. We look forward to sharing additional details on this exciting transaction in the coming months. We appreciate all of our shareholders and investors that have participated in the IPO and PIPE transactions. We look forward to a successful future together.”