Coca-Cola Co. has terminated an agreement with embattled recycling technology company Loop Industries Inc.
Montreal-based Loop reported the decision in an 8-K filed on Nov. 4 with the U.S. Securities and Exchange Commission. Coke notified Loop of the decision on Oct. 29, and the termination is effective Dec. 14.
The filing does not mention an Oct. 13 report from a stock short-selling firm that questioned the viability of Loop's chemical recycling processes.
According to the filing, Coke's Cross Enterprise Procurement Group terminated the agreement because Loop did not satisfy its first production milestone from a joint venture facility by July 2020, as required by the 2018 deal.
According to Loop, Coke indicated in the termination notice "that it is open and interested in exploring a new framework agreement with the company [Loop] for North America and/or Europe."
The now-canceled multiyear supply agreement had committed Coke bottlers to buying recycled PET from a factory in Spartanburg, S.C. The companies had not disclosed the volume of recycled PET that Coke expected to buy from the plant, or which Coke bottlers would be Loop customers.
According to Loop, the Spartanburg plant was originally scheduled to be commissioned in the third quarter of 2021, but it has been delayed by the COVID-19 pandemic. The plant is a joint venture between Loop and resin supplier Indorama Ventures PCL.
Loop said in the 8-K that it plans to talk with Coke when it has more clarity on when the JV plant will start production.
This all comes as Loop Industries has been dealing with negative stories about the viability of its chemical recycling process.
On Oct. 13, Hindenburg Research LLC published a report that it said was based on interviews with former Loop employees, litigation records and other research that questioned Loop's technology. Hindenburg said it shared its findings with regulators.
On Oct. 16, Loop disclosed that it had received a subpoena from the U.S. Securities and Exchange Commission for details on its technology.
Loop has defended its depolymerization technology and said Hindenburg's accusations were inaccurate. Loop said Hindenburg holds a short position on Loop stock and said the conclusions in the Hindenburg report are either wrong or based on its first-generation PET recycling technology.
Loop's stock price has fallen more than 40 percent since Hindenburg published its report, from closing at $11.61 on Oct. 12 to a close of $6.77 on Nov. 12. Loop Industries is listed on the Nasdaq.