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September 09, 2020 12:18 PM

Alpek to recover $160M from M&G bankruptcy deal

Frank Esposito
Senior Staff Reporter
Plastics News Staff
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    CorpusChristi-main_i.jpg
    File photo/BL Harbert International

    Early construction at the M&G plant in Corpus Christi, Texas.

    Strong PET resin results will allow materials supplier Alpek SAB de CV to recover $160 million in debt from a former unit of M&G Group over the next five years.

    Monterrey, Mexico-based Alpek announced the agreement in a Sept. 7 news release. The financial restructuring deal between M&G Polimeros Mexico SA de CV, known as M&G Mexico, and most of its creditors, including some Alpek units, has been approved by Mexican bankruptcy court.

    The approval would end bankruptcy proceedings that were initiated by M&G Mexico and its creditors in February 2019. Under the agreement, Alpek will begin recovering $160 million in guaranteed debt as early as the end of this year.

    Officials said in the release that based on strong PET demand and margins seen in recent months — as well as the outlook for the global polyester industry — Alpek expects to recover the full amount of its guaranteed debt plus interest within the next five years.

    Alpek will continue supplying purified terephthalic acid (PTA) feedstock needed by M&G Mexico's PET plant in Altamira, Mexico. Officials said this supply deal "will ensure stable operations" at M&G Mexico as Alpek recovers its debt, and will also provide Alpek with "a steady offtake" for its PTA site in Altamira.

    "We are very pleased to see this process come to its successful completion under terms that are beneficial to all parties involved," Alpek CEO Jose de Jesus Valdez said in the release. "Recovering our guaranteed debt will help Alpek continue pursuing value-generating opportunities while relying on a stronger free cash flow and financial position."

    Mossi Ghisolfi (M&G) Group of Tortona, Italy, and its U.S. unit, M&G Polymers USA LLC of Houston, filed for bankruptcy in late 2017. M&G's struggles included its inability to finance a massive PET resin and feedstocks complex that it was building in Corpus Christi, Texas. At the time of the filing, numerous contractors working on the project, known as Project Jumbo, said that they hadn't been paid for some time.

    Alpek said at the time it was owed $49 million for supplies of PTA. Alpek had stopped shipments of PTA to two plants operated by M&G in Mexico and Brazil as a result of the debt.

    Alpek previously had agreed to distribute more than 1 billion pounds of PET made at the new M&G unit. M&G also owed $57 million to PET and feedstocks supplier Indorama Ventures of Montreal.

    In early 2018, Alpek and two partners — including Indorama Ventures Public Co. Ltd. of Bangkok — acquired the Corpus Christi site for $1.1 billion. The newly formed Corpus Christi Polymers LLC said earlier this year that the project should be completed in 2023.

    When completed, the Corpus Christi site is expected to be the largest single-line vertically integrated PTA-PET production facility in the world and the largest PTA plant in the Americas. The site's annual PET production capacity will be 2.4 billion pounds, while its PTA output will be almost 2.9 billion pounds.

    Under terms of the joint venture, each of the three partners has the right to receive one-third of the capacity of PTA and PET produced at the Corpus Christi plant. Each also will independently sell and distribute those materials.

    Alpek is a leading global supplier of PET and PTA. In North America, the firm owns and operates Charlotte, N.C.-based PET maker DAK Americas, as well as Mexican polypropylene maker Indelpro. Alpek also is a leading supplier of expandable polystyrene and recycled PET in the Americas.

    In 2019, Alpek posted sales of $6.2 billion. The firm operates 28 plants in the U.S., Mexico, Canada, Brazil, Argentina, Chile and the United Kingdom and employs more than 6,000.

    In late 2019, Alpek acquired Lotte Chemical UK Ltd., whose assets included a 770 million pound-per-year capacity PET resin plant in Wilton, England. The acquisition was Alpek's first outside of the Americas.

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