Closed Loop Recycling bought by Euro Capital
Plastics reprocessing company Closed Loop Recycling (Closed Loop) has been acquired by Dubai-based investment company Euro Capital (Euro Cap).
The plastics reprocessing company called in administrators last week, and has since been purchased by the owners of Euro Packaging, Afzal and Shabir Majid, for an undisclosed sum. They have reportedly ‘pledged an ongoing investment programme to support the business’.
The company will now be known as Euro Closed Loop Recycling Ltd.
David Dunckley, partner in restructuring at accountancy firm Grant Thornton – which handled the pre-pack administration of the company – said: “Closed Loop has struggled financially in recent years, with problems reflective of the drop in oil prices impacting on competition with virgin plastics combined with increased costs in raw materials. It has made considerable progress in addressing its operating cost base and rebuilding revenues, but continued adverse market conditions have made stabilising the business difficult.
“The sale to Euro Capital will see the transfer of employees and give Closed Loop the financial resources to stabilise itself and start capitalising on its well-known brand in a marketplace where sentiment and volumes are improving.”
Chris Dow, Chief Executive of Closed Loop Recycling, will retain his position at the new company, and all other jobs have been protected.
Closed Loop Recycling background
The news follows on from Closed Loop’s warning that it would “inevitably go into administration” without government or industry support.
The Dagenham-based bottle manufacturer announced earlier this year that it was having financial difficulties following ‘unprecedented challenges’ due to the drop in the price of oil making virgin plastics cheaper than recycled, and manufacturers switching to virgin plastics in their packaging (despite it being just 0.1p less expensive per bottle).
Indeed, Closed Loop stated it that if businesses would pay 0.1p more for a two-pint plastic milk bottle, it would have secured the future of the company. The marginal increase in the price of milk was supported by the public, with a YouGov poll released on Wednesday (25 March) finding that 68 per cent of people would pay more for milk in recycled packaging.
However, there had been little movement from the dairy and retail industries in reverting back to recycled plastics.
As a result of this, and ‘operational challenges and unfavourable market conditions’, one plastic reprocessor, ECO Plastics – now known as ECOPlastics Recycling – sought acquisition last year following financial difficulties. This led to members of the waste and resources industry issuing urgent calls for retailers and manufacturers to ‘switch back’ to using recycled plastic to help protect the ‘vital UK recycling infrastructure’, such as Closed Loop Recycling. Stakeholders in the waste and reprocessing industry and its supply chain also gathered in London last week to discuss how to improve recyclate markets and protect the industry from price shocks such as these.
It is thought, however, that more dairies and retailers could move back to using recycled plastics in their packaging in near future, as the price of oil is steadily increasing (currently over US$60 (£39) a barrel, up from a low of $50 (£33)) – making virgin plastics more expensive than their recycled counterparts once again.
Find out more about Closed Loop Recycling’s difficulties.