Roth CH Acquisition Co, a special purpose acquisition company backed by Roth Capital Partners and Craig-Hallum Capital Group, and PureCycle Technologies, a leading innovator in polypropylene recycling, announced today that they have entered into a definitive merger agreement for a business combination.
Upon closing of the transaction, the newly created holding company will be re-named “PureCycle Technologies, Inc.” and will be listed on the Nasdaq Capital Market under the new ticker symbol PCT. Additionally, ROCH today entered into definitive purchase agreements for a $250 million common stock PIPE transaction. The transactions are expected to close in the first quarter of 2021.
PureCycle Technologies LLC holds the exclusive global license to commercialise the only patented solvent-based purification recycling technology for restoring waste polypropylene into virgin-like resin. This process, developed by The Procter & Gamble Company, and commercialised by PureCycle, is both more cost-efficient and environmentally sustainable than the traditional manufacturing process of producing virgin polypropylene, utilising approximately 75% less energy.
PureCycle’s Ultra-Pure Recycled Polypropylene has nearly identical properties and applicability for reuse as virgin polypropylene. PureCycle intends to obtain a Letter of No Objection from the U.S. Food and Drug Administration for its UPRP to be used in food-grade applications.
Global interest from key industry players
Strong interest and broad global awareness of PureCycle has resulted in strategic investments and highly-attractive offtake agreements with notable groups including Aptar, BMW i Ventures, Closed Loop Partners, Wasson Enterprise, Glockner Enterprises, L’Oréal, Milliken & Company, P&G, Ravago, and Total.
As a result of this strong demand, PureCycle has contracted pricing for its UPRP that is both de-linked from commodity pricing and at a premium to virgin polypropylene resin. Combined with abundant polypropylene waste feedstock, PureCycle expects to achieve EBITDA margins in excess of 50% from the Company’s first seven plants in 2024.
The Company is building its first commercial-scale plant in Ironton, Ohio, which is expected to have nameplate capacity of approximately £107 million per year when fully operational. Production is expected to commence in late 2022 with full capacity expected to be achieved in 2023. PureCycle raised approximately $250 million in a tax-exempt municipal bond offering in October 2020 to fund the construction of the Ironton facility.
The Company has long term contracts for feedstock to supply the Ironton plant production and has entered into long term offtake agreements with leading global customers and Fortune 500 partners for all of the production of its UPRP from the Ironton facility.
PureCycle intends to build new recycling production facilities globally, with the goal of having 30 commercial lines operational by 2030 and 50 by 2035. In addition to PureCycle’s first plant in Ironton, Ohio, the Company expects to announce its next location in Europe and to commence production in 2023 with a nameplate capacity of approximately £107 million when fully operational.
Additional expansion in the United States is expected to include five scaled up commercial lines capable of producing over £165 million each of its UPRP. Pre-engineering for the design and installation of five commercial lines in a single “cluster” site is currently underway and will result in a combined capacity of over £825 million annually in one location. Production from the Ironton, Europe, and cluster sites are expected to bring over £1.2 billion of annual recycled polypropylene to the market in the next five years.
Innovative sustainable materials
The proceeds of this transaction are intended to provide us with the balance sheet strength to accelerate the global rollout of our proven technology addressing the immense global problem associated with polypropylene waste. The current global challenges surrounding polypropylene waste are significant. Of the approximately £170 billion of polypropylene waste produced annually, less than 1% is recycled today; the remainder largely ends up in landfills and the ocean, creating a massive environmental problem. We look forward to partnering with the Roth CH team on an efficient, accelerated path for a successful public listing.”
Byron Roth, Chairman and CEO of Roth CH, said, “We searched for a business combination that would not only be a compelling growth company but could also benefit from the relationships and experience of our two growth investment banks. We believe PureCycle’s technology will be transformative in plastic recycling and help companies meet their sustainability goals. We look forward to sharing additional details on this exciting transaction in the coming months. We appreciate all of our shareholders and investors that have participated in the IPO and PIPE transactions. We look forward to a successful future together.”
PureCycle is retaining its experienced management team, including CEO Mike Otworth, CCO David Brenner, and CFO Michael Dee. Mr. Otworth has over 23 years of experience leading and scaling early-stage companies. Mr. Brenner was PureCycle’s first hire and has led PureCycle’s commercial expansion over the last four years. Mr. Dee spent nearly three decades in public markets, corporate finance, private equity and M&A in senior roles at Morgan Stanley, Temasek Holdings and the Asian Infrastructure Investment Bank.
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