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SK Global Chemical Takes 10% Stake in Loop Industries

The strategic partnership aims to bring sustainable, circular plastics to Asian markets.

Clare Goldsberry

June 24, 2021

1 Min Read
businessmen shaking hands
Image courtesy of Metamorworks/Adobe Stock

Loop Industries (Montréal) announced that it intends to form a strategic partnership with SK Global Chemical (SKGC) Co. Ltd., a subsidiary of South Korea’s SK Group.

Loop Industries’ stock rose 13% after SK agreed to take a 10% stake in the advanced recycling company. The partnership plans to accelerate the commercialization of Loop’s sustainable polyethylene terephthalate (PET) plastic and polyester fiber manufacturing technology throughout Asia.

Under the transaction, SK will purchase 4.7 million new treasury common shares of Loop Industries at a price of $12 per share, for a total of $56.5 million, according to Seeking Alpha, a stock market information publication. Loop intends to use these proceeds to fund its planned Infinite Loop manufacturing facility at a recently acquired site in Bécancour, Quebec.

According to the memorandum of understanding, SKGC will own 51% of the joint venture and Loop will own 48%. Loop will also receive a recurring annual royalty fee as a percentage of revenue from each facility for the use of its technology, said Loop’s press release.

SKGC’s press release noted that “initial discussions” between the partners “contemplate beginning preparation” on a first facility in South Korea in the last half of 2022. Four facilities are supposed to be built in Asia by 2030, with projected combined consumption of waste PET plastic and polyester fiber amounting to approximately 400,000 tons.

SKGC was granted the option to acquire an additional 462,298 common shares of Loop at $11 per share within the next 12 months; 4,714,813 common shares at a price of $15 per share within the next three years; and a further 2,357,407 shares at $20 per share, conditional upon the timing of construction of the first Asian manufacturing facility.

About the Author(s)

Clare Goldsberry

Until she retired in September 2021, Clare Goldsberry reported on the plastics industry for more than 30 years. In addition to the 10,000+ articles she has written, by her own estimation, she is the author of several books, including The Business of Injection Molding: How to succeed as a custom molder and Purchasing Injection Molds: A buyers guide. Goldsberry is a member of the Plastics Pioneers Association. She reflected on her long career in "Time to Say Good-Bye."

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