Buyer moves in for Closed Loop Recycling

The company has been bought in a pre-pack arrangement after having posted losses in recent months due to challenging trading conditions.

Much of the firm’s problems had stemmed from a drop in the global price of oil – which had led to a fall in the price paid for recycled polymers.

Closed Loop – which was the biggest UK supplier of rHDPE for use in the manufacture of milk bottles – had been locked in talks with dairies and retailers seeking assurances that they would not turn away from commitments to source recycled polymers, with the price of virgin polymer becoming more competitive (see letsrecycle.com story).

The future of the business will now be dependent on whether it can continue to supply recycled polymers at a competitive price to virgin material. A climb in the value of oil in recent weeks is thought to have offered some hope, although it was too late to prevent Closed Loop from entering administration.

Terms

Financial terms of the deal are not known but it is understood that some creditors may be set to lose out. It is expected that private equity firm Foresight which was one of the major shareholders in the business, having invested £4.7 million to develop the plant, could see a loss on its investment.

Closed Loop has assets including its state of the art recycling plant on the London Sustainable Industries Park, valued at around £20 million, but posted losses in consecutive years totalling £2.9 million in 2012 and £3.6 million in 2013.

Closed Loop opened its 35,000 tonnes per year capacity milk bottle recycling plant in 2008, and it has been seen as one of the flagship recycling facilities for the plastics sector since its opening. Works to expand the capacity of the plant to handle 55,000 tonnes of plastic bottles were undertaken in 2013.

Managing director Chris Dow will be staying with the business, and will now take on the role of chief executive. Mr Dow has been a vocal advocate of the UK reprocessing sector, and was instrumental in securing investment for the business.

Support

Commenting following the acquisition, Mr Dow, said: “We are delighted that Euro Cap has come on board. The number one priority for us and our investors is to continue to support the Dairy Road Map in the UK. In the last eight weeks, the industry has shown real commitment to recycled HDPE content. This deal offers the potential for the supply chain to meet this obligation of 30% recycled content, but this will only happen if the retailers enforce this through the whole of the supply chain.”

As part of the sale, Closed Loop Recycling will be renamed Euro Closed Loop Recycling. All 120 jobs at the plant are set to remain. Euro Capital has pledged an ongoing investment programme to support the business.

The situation at Closed Loop is symptomatic of difficulties being felt across the plastics recycling sector. In a separate deal another major plastics recycler – Lincolnshire based ECO Plastics – was bought out of administration by German investment firm Aurelius in December (see letsrecycle.com story).