Florida-based plastics recycler PureCycle Technologies announced this week that its subsidiary, PureCycle: Ohio LLC, has agreed to buy out the majority holders of $219.55 million of outstanding private activity bonds tied to its Ironton, Ohio facility, the company's first polypropylene purification plant.
The tax-exempt bonds had $219.55 million in principal outstanding at the time they were issued, according to a posting on
The Series 2020A Southern Ohio Port Authority facility revenue bonds will sell for $1,030 per $1,000 principal amount, according to a
The price "is calculated in part to compensate the Sellers for default interest accruing from January 2, 2023 through December 31, 2023," the release said, and any other accrued and unpaid interest on the bonds from the most recent interest payment date through closing date of the purchase.
The bonds were issued to finance the Ironton factory, which recycles used plastics to create what PureCycle says are like-new plastic resins.
The plant opened later than expected, ran into mechanical problems that halted production for an extended period, and is the subject of a payment dispute with the contractor that built it, according to notices posted to EMMA.
Among other things, the purchase transaction would add amendments voiding certain covenants and events of default in the bond documents. PureCycle: Ohio may also buy the tax-exempt Series 2020B and taxable Series 2020C bonds, which have $20 million and $10 million principal outstanding, respectively.
In response to PureCycle's announcement, bond trustee UMB Bank
PureCycle did not respond to requests for comment.
"Clearly the start-up in Ironton has not been without challenges," CEO Dustin Olson said in a Nov. 8
He said that despite "numerous mechanical headaches" and limited production rates in the third quarter of 2023, "We expect to see exponential increases in production rates."
Under a revised bondholders agreement, PureCycle Technologies agreed to deposit $50 million of cash into a trustee account in the fourth quarter of 2023, according to the company's
During the November earnings call, then-Chief Financial Officer Larry Somma acknowledged that PureCycle had yet to execute the revised bondholders agreement. But he said the three-month extension of PureCycle's required milestones was crucial.
Somma later resigned and the firm is seeking a permanent CFO, it said
PureCycle's reserves required per revenue bonds ticked up slightly in the third quarter. Its general liquidity reserve rose to $102.2 million from $101.7 million. Its capitalized interest and debt reserves climbed to $41.7 million from $41.2 million. And its other required reserves rose to $26 million from $24.7 million, a 1.3% change.
In September, PureCycle completed a convertible note offering in the corporate for $250 million. The grain convertible bonds raised $218.5 million in net proceeds. The deal was multiple times oversubscribed, Somma said, and its 7.25% coupon priced at the low end of the marketed range.
"The proceeds replenished much-needed cash on our balance sheet that will be used to fund some of the equity requirements of our growth initiatives," he said, noting that PureCycle also has a $150 million undrawn line of credit available.
