Beverage giant Coca-Cola Co. has sued PET recycler Pure Tech Plastics LCC in a breach of contract dispute, claiming that two units of the beverage giant are owed more than $5 million.
Coke also asked the court to order Pure Tech to immediately turn over to it “the collateral” pledged as security for the debt. That could be the new food-grade PET recycling plant being built in Richmond, Ind., by Perpetual Recycling, which bought Pure Tech shortly after securing a line of revolving credit — which is the center of the dispute — from Coca-Cola Financial Corp. in October 2008.
The lawsuit, filed March 21 in U.S. District Court in Atlanta, claims that Pure Tech has not paid the principal on $3 million loaned by Coca-Cola Financial as part of a two-year revolving credit agreement dated Oct. 14, 2008, and that Pure Tech also owes $1.99 million, plus interest, to Coca-Cola Recycling LLC.
The lawsuit listed as the defendant David Bender, as a registered agent for Pure Tech, based in Glencoe, Ill.
Bender is president and CEO of both Perpetual Recycling and the Chicago-based holding company, Re: Think Recycling Group LLC.
This past February, Perpetual announced that it will open a $30 million, 100,000-square-foot plant in Richmond, Ind., to make food-grade flake.
The first line of that plant will have capacity to produce 75 million pounds of food-grade PET flake annually. It is scheduled to be operating at full capacity by the first quarter of next year.
That supply of food-grade PET could be material that Coca-Cola strongly desires, said one source — particularly in light of Coke's March 2011 shutdown of its joint venture food-grade PET recycling plant in Spartanburg, S.C.
That plant, plagued by technical problems, resumed operations last summer but is still only operating on a limited basis, sources said.
Coke has said that it wants to source 25 percent of its PET bottles from recycled or renewable materials by 2015, and it wants to make its PET bottle entirely from plants by 2020.
In the lawsuit, Coca-Coca Financial said it is owed the principal of $3 million, plus $40,500, as of March 20. It also states that Coca-Cola Recycling is owed $1.99 million, plus interest of $110,821, as of March 20.
The lawsuit said the defendants had made three payments totaling $75,000.
In the lawsuit, Coca-Cola Financial also seeks to foreclose “its security interest in the collateral” given by Pure Tech Plastics for the debt. The company also asked the court to order the defendant, Pure Tech, to turn over the collateral immediately to Coca-Cola Financial and to further grant Coca-Cola Financial “such additional relief as is just and equitable.”
“Coca-Cola Financial is entitled to an immediate writ of possession foreclosing its security interest in its collateral and granting it an immediate writ of possession on said collateral,” said the lawsuit.
Under a claim of confidential business information, the court agreed to let Coke present the credit agreement and security agreement privately, and under the seal of a protective confidentiality order.
Coke is represented in the case by William Carmichael of Stokes, Lazarus & Carmichael LLP, based in Atlanta.
The case has been assigned to Judge Steve Jones.