Plastics recycling company ECO Plastics has secured a solid financial platform of 24 million to fund an expansion that will more than double the amount of bottle-grade recycled PET plastic it produces at its Lincolnshire facility.
The company revealed yesterday (July 19) that it had raised a mixture of equity and debt financing for the project, including a 5 million equity investment from the Ludgate Environmental Fund and 16 million in debt funding from Close Invoice Finance, part of the Close Brothers banking group.
This is added to a 5 million investment made by soft drinks giant Coca Cola in March 2011 (see letsrecycle.com story), as part of a 10 year join venture with ECO that will increase the total input capacity of the Hemswell facility from 100,000 tonnes-a-year to 140,000 tonnes-a-year.
It will also enable ECO to more than double the amount of food grade recycled PET produced in the UK, from 35,000 tonnes to around 75,000 tonnes a year. Coca Cola will benefit by securing supply of enough domestically-sourced feedstock to meet its target to include 25% rPET in all of its UK plastic packaging by 2012. The company currently sources food-grade rPET from continental Europe.
A spokesman for ECO explained that, as well as funding the joint-venture expansion which will boost the amount of rPET produced on site from 15,000tpa to 40,000tpa – the finance would also help to support the operation of the new reprocessing capacity.
ECO secured planning permission for the purpose-built facility needed to house the expansion in May 2011 (see letsrecycle.com story), and the securing of finance was hailed as the latest milestone for the project by the companys chairman Peter Gangsted.
Milestone
This represents an important milestone for both the drinks manufacturing industry and the recycling industry. We are delighted that the markets have recognised the value of this model, he said.
The UK sustainable packaging market has huge growth potential and our expansion will make ECO Plastics a world leader.
For Ludgate, which has headquarters in London, the investment represents 8.6% of the assets the Fund currently manages, and the companys chief investment officer, Bill Weill, said Coca Colas involvement had given it huge confidence in the future of both ECO and the UK PET reprocessing industry.
This deal is an important step for the future of ECO Plastics in a regulatory environment where increasing recycling rates and landfill taxes highlight the importance and benefits of greater resource efficiency, he said.
Mary McNamara, chief executive of the commercial division at Close Brothers, added that the group was delighted to have played a key role in funding ECO Plastics exciting expansion plans.
ECO expects the expanded facility to be fully operational next year.
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