PureCycle Technologies provides Q3 operational updates

PureCycle Technologies Inc., Orlando, Florida, has announced a corporate update for several projects, including its plant in Ironton, Ohio, and facilities in Augusta, Georgia. It also has released financial results for the third quarter ending Sept. 30.

PureCycle's flagship purification facility in Ironton is in the final phases of construction, with all 26 modules delivered and lifted into place. Additionally, PureCycle has completed its Ironton preprocessing (PreP) buildout and is commissioning and processing feedstock on-site. The Ironton purification facility will have an annual capacity of 107 million pounds annually of "ultrapure" recycled (UPR) resin.

"The PureCycle team continued to make significant progress in executing the company's strategic growth plans during the third quarter,” PureCycle CEO Dustin Olson says. “Timing of mechanical completion and pellet production at our flagship Ironton facility has been pushed back a few weeks due to unexpected delays in the delivery of key processing equipment. Currently, all our construction modules are set, and we anticipate reaching mechanical completion and pellet production in the first quarter of 2023.”

Engineering and construction activities have moved forward at its planned multiline purification facility in Augusta. Based on the current expectation that funding for the project will be in place by year-end, the company anticipates mechanical completion, startup and full commissioning of Augusta lines Nos. 1 and 2 to be in the second half of 2024. The company says it is discussing the financing timeline with the Development Authority of Augusta, Georgia (AEDA).

PureCycle says it continues to execute its East Coast prep strategy to supply feedstock for its Augusta purification operations and has adjusted the startup timelines at the three locations to be aligned with its revised purification facility timeline. The company says it is working with local officials in central Florida to solve issues related to obtaining necessary water and sewer permits to construct its PreP site.

The company also has begun an evaluation of alternative sites in central Florida if efforts with local officials are unsuccessful. The company says it does not believe the relocation of the PreP site will impact the operations at the Augusta facility or have a material financial impact. The company expects PreP facilities in Florida, Denver, Pennsylvania and Georgia to be fully operational ahead of the completion of Augusta purification lines Nos. 1 and 2.

PureCycle and SK Geo Centric entered into a joint venture agreement Oct. 20 that outlines the terms of its 50/50 partnership in developing and operating a polypropylene purification facility with an annual capacity of 130 million pounds in Ulsan, South Korea. The company says it anticipates construction activities to begin in the second half of 2023, with production ramp-up expected in the second half of 2025.

PureCycle has continued to advance the feedstock procurement pipeline, with about 301 million pounds of polypropylene material under letter of intent, to fully supply the first two lines of the company's purification facility in Augusta. PureCycle's current feedstock supply pipeline includes, postconsumer noncurbside, postconsumer curbside and postindustrial.

The company says it believes the market's continuing interest in PureCycle's UPR resin is demonstrated through the acceptance of the "feedstock plus" pricing mechanism and the compilation of offtake agreements for the Ironton and Augusta operations.

In September, the company received a notice from one feedstock supplier and offtake customer of the Ironton facility, wanting to terminate the feedstock and offtake agreements. The company is disputing the claims or the party's right to terminate the agreement. Without expressing any opinion on the validity of the feedstock and offtake party's claims, the bondholder trustee notified the company that it was exercising its authority under the bond indenture to investigate the allegations. During this, the company's request for payment of $12.4 million of the remaining $13.2 of funds available for construction expense reimbursements remains pending.

PureCycle is preparing to enter into a feedstock agreement and an offtake agreement that includes the "feedstock plus" pricing model, with other parties, subject to review by the trustee.

As of Sept. 30, PureCycle had a total liquidity of $416.1 million, including $215 million of cash, cash equivalents and debt securities available for sale and $201.1 million in restricted cash. PureCycle had $233.3 million in debt and accrued interest. The Ironton purification facility's budget estimate has increased from $10 million to about $317 million due to inflation, supply chain issues caused by a German-specific outbreak of COVID-19 and transportation issues on the Mississippi River.

The company says market conditions remain challenging and have created uncertainty as to the timing of the currently anticipated project financing for the Augusta facility. Due to financing issues, on Oct. 5, the company and the AEDA signed an agreement that permits the AEDA to terminate construction if the company can't get financing by Dec. 31. The company says it continues to work with the AEDA and is pursuing various structures for the financing of the Augusta facility.

"We have experienced a more challenging financing market than originally anticipated when initiating our fundraising efforts in June,” PureCycle Chief Financial Officer Larry Somma says. “Despite the market, we are encouraged by the meaningful interest that has been created in support of our mission. At this stage, PureCycle has several options that are being evaluated [which give] us confidence that the company will raise the necessary capital to fund Phase 1 of our multiline development in Augusta and three East Coast PreP facilities. Our objective remains to raise the necessary capital to fund our growth and help bridge us to our goal of delivering Ironton operational revenue in 2023. We are working diligently to have the financial flexibility and the needed commitments by year-end."