Plastics recycler PureCycle Technologies Inc. is warning the company might not be able to meet upcoming multimillion-pound production requirements stipulated in financing used to build the facility.
Problems at the company's Ironton, Ohio, polypropylene recycling facility, which is designed to purify used polypropylene into a virgin like condition, started after an Aug. 7 power failure caused by a severe thunderstorm, PureCycle said.
The power disruption knocked the plant off line for two hours, and PureCycle said it was able to recover "the next day without any identifiable significant issues."
But that all changed Aug. 25 when a seal appeared to fail, the company said.
"The Ironton facility was cycled down, evaluated and then returned to service within four days. The mechanical component recovered without any obviously indication of ongoing problems," the company said.
The seal, however, completely failed Sept. 3. Repair attempts were made Sept. 5, and the company replaced the component Sept. 9. The facility, PureCycle said Sept. 13, "is currently in the process of restarting."
In its notice to bondholders, PureCycle described the problem as a "seal system failure in a key operation that resulted in a loss of barrier fluid pressure surrounding the seal."
The company made a declaration of force majeure, warning investors and customers that it may not meet a 4.45 million-pound output requirement, in a single month, by Sept. 30 as part of the company's financing.
"As a consequence of the power outage induced seal failure, PureCycle currently believes it may be prevented from meeting the milestone," the company said in a notice to bondholders.
The company's loan agreement includes "partial or entire failure of utilities" as a force majeure, the notice by PureCycle General Counsel Brad Kalter states.
PureCycle's Ironton facility is based on technology developed and licensed from Procter & Gamble Co., the consumer products maker based in Cincinnati.
It was just in June that the company produced its first recycled resin from post-industrial plastic at a commercial scale.
The Ironton plant, which cost about $361 million, is designed to produce 107 million pounds of recycled PP annually when fully functional.
PureCycle uses solvent to strip away impurities in used PP, creating what the company brands as Ultra-Pure Recycled resin that mimics virgin material.