Loop Industries, a leading innovator in clean technology whose mission is to accelerate a sustainable plastics economy, today announced that it intends to form a strategic partnership with SK global chemical Co. Ltd., a subsidiary of South Korea’s SK Group, one of Asia’s largest conglomerates, to accelerate the commercialization of Loop’s sustainable polyethylene terephthalate plastic and polyester fiber manufacturing technology throughout Asia.
Loop’s patented technology allows for waste PET plastic and polyester fiber to be upcycled into virgin-quality PET using low heat and no added pressure. This low energy process allows Loop to eliminate contaminants, such as dyes, additives, and other impurities, preventing otherwise unrecyclable materials like colored and contaminated plastics or textiles from ending up in landfills and natural areas.
Joint Venture Partnership
Loop and SKGC intend to form a joint venture with exclusivity to build sustainable PET plastic and polyester fiber manufacturing facilities throughout Asia, which accounts for approximately 60 percent of the world’s population, making it a key market in terms of plastic manufacturing, consumption and waste. Under the terms of the Memorandum of Understanding (“MOU”) for the proposed joint venture, SK global chemical will own 51 percent of the joint venture and Loop will own 49 percent. Loop will also receive a recurring annual royalty fee as a percentage of revenue from each facility for the use of its technology.
SKGC has today issued a separate press release discussing Loop’s technology and SKGC’s objectives for the Joint Venture. As stated in SKCG’s press release, initial discussions between the partners contemplate beginning preparation on a first facility located in South Korea in the first half of 2022 and the construction of four facilities in Asia by 2030, with projected combined consumption of waste PET plastic and polyester fiber amounting to approximately 400,000 tons.
Once fully operational, these four facilities could claim an annual savings of 632,100 metric tons of CO2, which is the equivalent of more than 2.5 billion kilometers driven by an average passenger vehicle or ~270 million liters of gasoline consumed.[1]
Strategic Equity Investment
In addition, Loop and SKGC have concluded a definitive agreement for SKGC to become a strategic investor in Loop. SKGC will purchase 4,714,813 new treasury common shares of Loop at a price of $12 per share, for total consideration of $56.5 million. Loop intends to use these proceeds toward the funding of its planned Infinite Loop™ manufacturing facility at its recently acquired site in Bécancour, Québec.
SKGC is also being granted options to acquire an additional 461,298 common shares at $11 per share within the next 12 months, 4,714,813 common shares at a price of $15 per share, within the next 3 years, and a further 2,357,407 shares at $20 per share, conditional upon the timing of construction of the first Asian manufacturing facility. SKGC is being granted a seat on Loop’s Board of Directors and as such is expected to provide valued input into the continuing development of Loop’s global commercialization strategy.
Closing of the strategic equity investment is as soon as practical and no later than 90 days from announcement.
Management Commentary
“We are delighted to form a strategic partnership with SK global chemical,” said Daniel Solomita, Founder and CEO of Loop Industries. “SK global chemical is an ideal strategic partner to accelerate the growth of our company and the global commercialization of our technology. Its scale and sophistication, its global chemicals manufacturing footprint and a shared vision to create value through sustainability and innovation make them a valued partner in our journey to bring our technology to market.”
“Our team has been extremely impressed by the thoroughness and extent of SKGC’s technical due diligence on Loop, which it has conducted over the past several months, including a recent on-site verification of Loop’s technology at our demonstration facility,” he added. “We are excited to collaborate with SKGC to commercialize our technology and play a meaningful role together to mitigate the environmental impact of global plastic waste and help consumer brands meet their stated goals for achieving high rates of recycled content in their products.”
SK global chemical’s CEO, Kyung Soo Na said: “We look forward to collaborating closely with the acclaimed company, Loop, which has great technology competencies in correlation to the plastics recycling category. Furthermore, it is our sincere intention to further expand and add value in the APAC region together with Loop backed by its Chemical Recycling technology that will work towards realizing a Plastic Circular Economy.”
www.loopindustries.com www.skglobalchemical.com
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[1] Source: Preliminary Life Cycle Assessment of Loop GEN II PET Depolymerization Technology, 2020. Equivalencies calculated using the United States Environmental Protection Agency Greenhouse Gas Equivalencies Calculator
