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Quebec's Recyc RPM forced to shut down for restructuring

By: Michael Lauzon

June 19, 2014

A major plastics recycler in Quebec has shut down while it works on a restructuring plan.

Recyc RPM Inc. has capacity to recycle 50 million pounds per year of high density polyethylene and polypropylene at plants in Beauceville and St. Damien, Quebec, but recently laid off its staff of 90.

Recyc RPM vice president of sales and marketing Jean Yves Bacle blamed contaminated waste streams, inefficiencies in the province’s recycling system and lack of government support for the company’s problems.

Bacle said in a telephone interview that a typical bale that Recyc RPM received from municipalities contained 15 to 40 percent contaminants, ranging from inappropriate plastics to glass shards. He said one batch even contained an engine block.

“We were spending C$100,000 (US$92,000) a month sending the waste to landfill,” Bacle stated.

Recyc RPM wasn’t able to operate at capacity because of the waste. The firm has an optical sorter, eight extrusion lines and other equipment, mostly at its headquarters plant in Beauceville. Extra washing of the feedstock also added costs so that the company was spending about C$2.5 million (US$2.3 million) a year in total to obtain a clean stream of scrap plastic.

Bacle said the scrap collection system in the province is inefficient. About 37 municipalities and other parties collect curbside waste, far too many for a province with 8.2 million residents, he claimed.

Quebec’s government compensates municipalities and other parties handling curbside waste through fees it collects from companies that produce containers, packaging and printed materials. The province has paid out nearly C$500 million (US$460 million) in the compensation program since 2005, estimated Benoit de Villiers, CEO of government agency Recyc-Quebec

Bacle said private sector companies that reprocess collected materials should get a cut of the funding.

“Providing direct, regular funding for recyclers through the compensation program could interfere with competition rules, which is something to avoid,” de Villiers stated in an email. He said recyclers’ production costs should be reflected in their contracts with municipal sorting facilities.

De Villiers added the province is considering a study to see how “the economic flows of curbside recycling can be optimized to benefit the entire value chain.”

Bacle said provincial funding for recyclers from the province is below par with other Canadian provinces. Recyc RPM got a loan to improve operations but the interest rate wasn’t favorable, according to Bacle. De Villiers said recyclers have access to financial assistance and his agency provided the company with C$475,000 (US$437,000) to buy equipment.

“We are asking the Quebec government to at least pay for the cost of shipping unusable scrap to landfill,” Bacle stressed.

Recyc RPM filed a notice for a plan to restructure on May 23. Raymond Chabot Inc. of Quebec City is acting as trustee in Recyc RPM’s bankruptcy protection from creditors.

The company owes secured creditors, mainly financial institutions and a provincial investment agency, about C$8.2 million (US$7.5 million). Unsecured creditors, including risk-capital lenders, government agencies and a host of contractors and suppliers, are owed C$11.2 million (US$10.3 million).

Recyc RPM did not handle PET scrap. Several other Quebec companies reprocess PET and some is shipped to Ontario for reprocessing, according to de Villiers.

Recyc RPM is the second major Canadian recycler to run into financial trouble this year. In April, Greenline Resins Inc. of Woodstock, Ontario, had its assets go on the auction block.

“There is a market out there for recycled resins,” Bacle said. “If our plan works we hope to reopen.”

Recyc RPM’s origins date to 1989 under the leadership of Louis and Luc Metivier, members of the family that started molder and extruder IPL Inc. of St Damien. The Metivier family and other investors sold their IPL stakes in 2010 to investment firms Novacap Investments Inc. and Fonds de Solidarite FTQ.