Bioplastics maker Cereplast Inc. has received new funding from European investors who are led by an unnamed Swedish bank.
In a July 20 news release, officials with Hawthorne, Calif.-based Cereplast did not specify the amount of funding they received from the group, which includes Zurich Cantonal Bank of Switzerland.
But Cereplast Chairman and CEO Frederic Scheer said the additional capital “allows [the company] to move forward aggressively in a very challenging economic environment.”
The investment comes less than three months after Cereplast announced that it would no longer make material in Haw- thorne and also would not open a new plant that's already been built in Seymour, Ind.
The company is seeking to have its bioplastics made by a toll compounder.
When the moves were announced in May, Cereplast officials said the decision resulted from a lack of new investors in the company.
In late 2008, private equity firm Cumorah Capital Inc. of Bainbridge Island, Wash., agreed to invest $20 million in Cereplast over a two-year period; in 2009, no new investors had emerged. That has changed.
In the news release, Zurich Cantonal Bank spokesman Rene Nicolodi said that the new approach “has the potential to help Cereplast land contracts with large packaging companies, which require large quantities of resin in a short time.” “It's quite important to note that [Cereplast's] business plan or model until very recently was to ramp up their own production facilities for a variety of products, and that's capital intensive, so it's a challenging thing to achieve,” said Nicolodi, the bank's senior sustainability analyst.
“The change in the business model to license out the production to the clients makes sense from my point of view,” he said.
Cereplast had operated about 45 million pounds of compounding capacity in Hawthorne for bioplastic compounds based on polylactic acid resin sourced from NatureWorks LLC.
In 2008, Cereplast reported sales of $4.6 million — double its 2007 total — but the firm still lost almost $13 million after losing almost $12 million the year before.
Sales in the first quarter of 2009 were down 37 percent to $561,000, but Cereplast's first-quarter loss of $2.2 million was less than the $3.8 million loss it recorded in the first quarter of 2008.
News of the manufacturing shutdown came only a day after Cereplast announced a deal to supply its Compostables-brand bioplastics to paper and construction products giant Georgia-Pacific LLC for use in Dixie EcoSmart-brand paper cups.
Scheer described the Georgia-Pacific deal as “the largest contract in the history of Cereplast and … our most important commercial achievement to date.”
In May, Cereplast announced a deal with Dorel Industries Inc. of Westmount, Quebec, to use Cereplast's Hybrid-brand bioplastics in bathtubs, step stools and other juvenile products.
Cereplast's per-share stock price was above 50 cents in early 2008, but has fallen: shares in the company stood at 14 cents in early trading Aug 18.
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