Latest Quantum Lifecycle Partners News
Mar 9, 2021
Concerns mount for Liberty Steel, GFG Alliance Company’s finances being described as heavily indebted and facing “difficulty.” As regulators and media outlets have scrutinized the finances of London-based Greensill Capital and Germany-based Greensill Bank AG, they have been trying to determine whether United Kingdom-based metals producer GFG Alliance was a victim of Greensill financing techniques or an underlying cause of mounting problems. An initial insolvency court filing by Greensill, reported on by the BBC on March 8, points to GFG and its chair Sanjeev Gupta as being in “financial difficulty and defaulting on debt,” according to the BBC. GFG Alliance consists of a collection of companies with operations in the U.K., Europe and Australia, including Liberty Steel and fellow steel producer InfraBuild, plus aluminum producer Alvance. Subsequently, government officials in Spain have been questioning whether the sale of an aluminum smelter there to GFG will be finalized, and governments in nations where GFG has existing facilities have been attempting to parse the conglomerate’s future . The BBC quotes a spokesperson for accounting and auditing firm Grant Thornton, which has been appointed as an administrator of Greensill Capital, as saying, “The joint administrators are in continued discussion with an interested party in relation to the purchase of certain Greensill Capital assets.” Previous media reports have indicated, however, that private equity firms that have expressed interest in portions of the Greensill Capital portfolio have backed away from GFG assets. Bloomberg reported in early March that Bermuda-based Athene Holding Ltd. was one such company that “wasn’t planning to take on assets” tied to GFG. The most recent BBC news item describes Gupta and GFG as having defied skepticism by purchasing “seemingly unloved industrial assets [that] many thought could not be run profitably.” In the United Kingdom, France and Australia, the firm has received considerable government support in what has been considered a joint effort to preserve jobs and retain metals production capacity in those nations. In the United States, Liberty Steel has been operating an older electric arc furnace (EAF) mill in Illinois and attempted to revive another older EAF mill in South Carolina. The South Carolina effort began stalling out last year , in part because of muted steel demand related to COVID-19, but also after an exchange of lawsuits with a metallics provider. In its attempt to purchase Thyssenkrupp’s mills, GFG seems to have encountered a less desperate seller that was willing and able to conduct a greater amount of due diligence than the company had previously encountered in Europe or Australia. A March 8 online feature story by Australia’s ABC News refers to supply chain financing as “well established” if somewhat complex. A variation of the technique devised by Greensill founder Lex Greensill, however, is described by ABC as “based upon a simple principle, incredibly lucrative and yet deeply flawed.” The deeply flawed part, according to ABC, was that Greensill altered supply chain financing so “the supplier was still paid at a slight discount, but the debt was owed by the [purchasing] company instead of the supplier, and that simple shift allowed the company to extend and alter the repayment terms without it appearing as though it was taking on more debt.” Adds ABC, some Greensill clients, possibly with GFG at the top of the list, “experienced difficulties in a COVID-induced crisis.” Subsequently, credit insurers and banks “realized some of these corporations were carrying far more debt than they had disclosed [and] investors, sensing greater risk than they had anticipated, began to back out.” The BBC says it has spoken to sources who point to Greensill as having provided GFG with an estimated $70 million per day in financing earlier in 2021. GFG has not provided an update on its own financing assessment other than an early March comment that it “has adequate funding for its current needs” and that its “refinancing plans to broaden its capital base and obtain longer term funding are progressing well.” A presentation by a Malaysia-based cargo inspection and certification service obtained by the Brussels-based Bureau of International Recycling (BIR) paints a picture of a nation preparing to enforce a stricter scrap metal import regimen. According to Selangor, Malaysia-based SIRIM QAS International Sdn. Bhd., that nation’s Ministry of International Trade and Industry (MITI) is now requiring all metal scrap export cargoes to Malaysia to be subject to a pre-shipment inspection process. The presentation by SIRIM, which describes itself as being “wholly owned” by Malaysia’s Ministry of Finance, also indicates metal scrap in “crushed form,” or shredded scrap, “is not allowed for importation.” The future of baled wire and cable shipments seems imperiled also, as all inspected and approved nonferrous shipments will have to meet a 94.75 percent metallic content threshold. SIRIM indicates the rules being clarified stem from a government order dating back to 2017. A 23-page guideline document issued by SIRIM and posted to the BIR website provides details on how that order is now intended to be enforced. All ferrous and nonferrous shipments will have to arrive by sea, rather than traveling across any of the nation’s land borders with Thailand, Indonesia, Brunei or Singapore (via which it is linked by road transportation causeways). Sea containers or bulk cargoes will require pre-inspection by SIRIM or another “accredited inspection body” and will need to have a Certificate of Approval (CoA). The CoA, says the inspection agency, requires a “bank guarantee” and can only be purchased by companies in Malaysia that have an “approved manufacturing license from MITI.” In Malaysia, a bank guarantee is defined as “an irrevocable commitment by a bank to pay an agreed sum to the beneficiary in the event that the party requesting to the guarantee fails to perform its obligations or liability to the beneficiary,” according to Kuala Lumpur, Malaysia-based Affin Bank. Plastic is seen as an unwanted contaminant in both ferrous and nonferrous scrap shipments, with Malaysia’s MITI having set a 0.25 percent threshold on plastic found in scrap metal cargoes. The tolerance for “electrical and electronic” scrap has been set at 0 percent. Shipments found out of compliance, according to SIRIM, will be returned to the country of origin. The agency also says funds from the “bank guarantee [tied to the CoA] will be used by SIRIM as transportation and incidental costs particularly for shipment that will have to be returned to the country of origin.” SIRIM says it is encouraging overseas inspection agencies or companies to apply to become an accredited foreign inspection body (FIB) by contacting the agency at firstname.lastname@example.org . Polyethylene terephthalate (PET) bottle recycler CarbonLite Holdings LLC, headquartered in Los Angeles, says it has filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The company cites pressures directly related to the coronavirus pandemic, including temporary production slowdowns caused by employee illness, the low price of virgin plastic relative to recycled PET (rPET) and the nine-month delay in the grand opening of the CarbonLite’s new Pennsylvania facility caused by travel restrictions that held up equipment commissioning by European manufacturers, as factors in its decision to reorganize. The filing pertains to all three of CarbonLite's facilities, in California, Texas and Pennsylvania, as well as to its California subsidiary, PinnPack Packaging. Production at all these facilities will continue as usual without interruption, as will payments to all employees, the company says in a news release about the filing. Layoffs are not under consideration, nor will customers see supply disruptions during the reorganization period, CarbonLite adds. "We've chosen to take this necessary step during a time of unprecedented challenge and expect to emerge from reorganization even more strongly positioned for the future," CarbonLite Recycling CEO Leon Farahnik says. "Our customers, all of whom have steadily increased their commitments to the use of recycled plastic in their products, have expressed confidence in this process and our carefully considered decision. " The company says it has incurred heavy capital expenditures for the recent expansion of its Dallas facility and construction of its 270,000-square-foot plant in Reading, Pennsylvania, which began limited production in October of last year. This plant is outfitted with advanced robotic systems and its grand opening is planned for this spring. CarbonLite says it plans include customer contract renegotiations to ensure the company’s solid financial footing. It supplies rPET to all major beverage companies in North America, including Coca-Cola, Nestle Waters North America , PepsiCo and other global beverage brands. The company opened its first plant in Riverside, California in 2012, followed by plants in Dallas and Reading. When the Reading plant is fully operational, CarbonLite says it will recycle more than 7 billion plastic bottles annually. Quantum Lifecycle Partners LP, Toronto, has acquired Global Electric Electronic Processing Inc. (GEEP) Costa Rica, effective Feb. 1. According to a news release from Quantum Lifecycle Partners, this is the company’s first acquisition outside of Canada. The acquisition expands Quantum’s footprint to service Latin America and the Caribbean with reuse and recycling solutions. “Following the successful creation of Quantum in 2019 through the acquisition of assets from Shift Recycling and GEEP Canada, I am excited to expand our footprint to Central America and expand our service offerings for our growing customer base,” says Gary Diamond, president of Quantum Lifecycle Partners. Quantum currently operates eight facilities with more than 400 employees. The company formed in 2019 following the merger of GEEP Canada and Shift Recycling in Canada to provide electronics recycling and information technology asset disposition (ITAD) services. GEEP Costa Rica will be integrated with Quantum Lifecycle over the next few months. Quantum reports that there will be no material changes in day-to-day operations initially, and as Quantum begins to optimize operations, service offerings will expand for GEEP Costa Rica customers. Snips, an Italian company, has partnered Eastman, with global headquarters in Kingsport, Tennessee, and European headquarters in Rotterdam, Netherlands, to launch a line of water bottles and food storage containers made with Eastman Tritan Renew copolyester. The items in the line will contain 50 percent International Sustainability and Carbon Certification- (ISCC-) certified recycled content made possible through chemical recycling. "Sustainability is at the core of our business," says Snips owner Raffaele Piacenza. "Reusable housewares are a practical way to eliminate single-use plastic waste. We need to start thinking about new solutions to enjoy the advantages that plastic offers while reducing waste. Eastman shares our commitment to sustainability and recycling. Now and in the future, Snips will be a steadfast participant in the circular economy." Tritan Renew is made using Eastman’s polyester renewal technology (PRT), one of its Advanced Circular Recycling technologies. The company uses glycolysis to produce Tritan Renew. Its other PRT is methanolysis, which Eastman is using at pilot scale today with a commercial facility planned at its Kingsport campus. Unlike those made from mechanically recycled plastic, products made with Tritan Renew present no trade-offs in quality because Tritan Renew is chemically identical to legacy Eastman Tritan copolyester, the industry standard for clarity, shatter resistance and dishwasher durability, according to the company. The new 4 Recycle line of Snips water bottles and plastic storage containers represents the first adoption of Tritan Renew in the EMEA (Europe, Middle East and Africa) market. "We're excited to help Snips augment its eco-friendly lineup," says Eastman Market Development Manager Arnold van den Berg. "We believe Tritan Renew, as a way of reducing plastic waste, will resonate with their customers. These durable bottles and containers represent every 'R' in the eco-conscience mantra we embrace at Eastman: reduce, reuse, recycle. We look forward to a long and collaborative relationship."