A publicly traded firm founded as a "blank check" acquisition vehicle by a longtime tech investor says it's in talks to merge with a polypropylene recycling company whose description is similar to that of chemical recycling firm PureCycle Technologies Inc.
The acquisition company, Graf Industrial Corp., is not identifying the target company, said Michael Dee, president and chief financial officer of the Houston-based firm.
But Graf's April 8 news release described the target similarly to PureCycle, as using technology developed by a major multinational to separates color, odor and other contaminants from plastic waste to make virginlike resin. PureCycle uses technology originally developed by Procter & Gamble Co.
As well, Graf's statement said the target company has been recognized both by the American Chemistry Council for its innovations in plastics recycling and as a top 100 invention by a weekly news magazine.
PureCycle has news releases on its website touting both of those, a 2017 award from ACC and, mostly recently, being named one of Time magazine's 100 best inventions of 2019.
Graf Industrial was founded by James Graf, the CEO of PSI Capital, which began as a developer of enterprise software for financial markets and now invests in technology like digital music platforms.
Graf is a former investment banker with Merrill Lynch, Deutsche Bank and TC Capital, with a focus on Asia. Dee also has a long background in investment banking.
The news release from Graf does not disclose terms of any potential deal, but a March 16 proxy statement filed by Graf Industrial to the Securities and Exchange Commission said it has $249 million in a trust account.
The Graf statement also said that the CEO of the target company would remain CEO of the new combined company and that the proceeds from the deal would be used to accelerate the target company's growth.
PureCycle did not respond to requests for comment, but its CEO, Mike Otworth, told Plastics News in an interview at K2019 in Germany in October 2019 that the company is planning up to 25 recycling plants around the world, at about $200 million apiece.
PureCycle's first commercial scale facility is currently under construction in Ironton, Ohio.
While not commenting on any specific acquisition target, Dee said that they believe the best way to finance rapid growth for the target company is to use the capital markets and become a public company.
"Where we can add tremendous value is in our access to capital," Dee said.
"We are also very aware within the capital markets, there is a tremendous interest for people to invest in" environmental, social and governance-type investments, he said. "Many of these investors find there are very few situations that are viable from an investment perspective."
Graf said its target company has developed strategic partnerships with major multinational firms and has a strong management team.
"Consumer demand, combined with major multinational sustainability commitments, reinforced by new stringent recycled content restrictions globally, have led to substantial interest in and demand for the target's innovative capabilities," Graf said. The target has commitments for over four times the output of its first production facility, Graf said.
Graf issued its news release as part of an SEC filing to shareholders asking for an extension of time until July 31 to complete the potential acquisition.