Recylex updates German unit’s cash needs amid feasibility studies

By Caroline Salls

Pittsburgh, July 15 – Recylex SA announced Monday that its German sub-group’s cash requirements for 2020 and 2021 are estimated at a total of €40 million, including €26 million for 2020 and €14 million for 2021.

According to a news release, these amounts do not include repayment maturities under the group’s existing financing.

In June, the company indicated that it had estimated the German sub-group’s projected cash requirements for 2019 at €44.4 million.

Since then, Recylex said the German sub-group’s availability of a €2.4 million tranche of its existing financing was postponed to Dec. 31, subject to the condition that a global financing agreement be concluded. If this tranche is not made available in 2019, the amount of the German sub-group’s estimated cash requirement for the whole of 2019 would be increased by this amount.

In this context, the company said German subsidiary Weser-Metall GmbH (MMG) recently initiated technical and operational feasibility studies for various investment projects and measures aimed at stabilizing the operation of the foundry with its two furnaces, continuing to improve its production and enabling its profitability.

Glencore agreement

In order to carry out these studies, WMG’s teams, which Recylex said were recently reinforced with specialized experts, will be further supported by Glencore International AG’s experts.

Recylex said the German sub-group has received an agreement in principal under which Glencore would grant up to €16 million in new bridge financing for the period of Aug. 1 to Nov. 30. The new financing would mature on Nov. 30 unless WMG’s production deteriorates significantly over that period.

Also, under the agreement in principle, the July 31 maturity date for €27 million in current bridge financing would be postponed to Nov. 30.

In connection with this agreement, Recylex said the German sub-group will formally request from its financial partners to postpone to Nov. 30 their rights of early termination under the existing financing, as well as €8 million in repayments due Dec. 31, 2018 and March 31, June 30 and Sept. 30, 2019.

Talks on hold

The release said the sub-group’s studies will take several months, but are necessary to update the German sub-group’s financial assumptions and forecasts for the period 2022 to 2024, the date of the initial maturity of the financing obtained in 2016.

Recylex said talks with all financing partners to determine if a global financing agreement is possible cannot resume until these studies are finalized and forecasts established.

Given the significant liquidity risks currently facing the group, Recylex said it is not in a position to close its 2018 annual and consolidated financial statements and will not be able to close its 2019 half-year financial statements on a going-concern basis until a global agreement on the financing of the German sub-group has been reached.

To date, the company has obtained a postponement until Oct. 31 of the date of its general meeting called to rule on the financial statements.

Recylex’s quarterly financial information for the quarter ended June 30 will be published on July 25.

The company also denied rumors that it has any plan to sell the group’s plastics business in France, known as C2P-France SAS.

The listing of the Recylex share on Euronext Paris is scheduled to resume on July 16 at the opening of the stock exchange.

Based in Suresnes, France, Recylex is a European group specialized in lead and plastics recycling, zinc recycling and the production of special metals, primarily for the electronics industry.

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