Roth CH Acquisition I Co. (NASDAQ: ROCH, ROCHU, ROCHW) (“Roth CH”),
a special purpose acquisition company backed by Roth Capital
Partners and Craig-Hallum Capital Group, and PureCycle Technologies
(“PureCycle”, “PCT” or the “Company”), a leading innovator in
polypropylene recycling, announced today that they have entered
into a definitive merger agreement for a business combination. Upon
closing of the transaction, the newly created holding company will
be re-named “PureCycle Technologies, Inc.” and will be listed on
the Nasdaq Capital Market under the new ticker symbol PCT.
Additionally, ROCH today entered into definitive purchase
agreements for a $250 million common stock PIPE transaction. The
transactions are expected to close in the first quarter of 2021.
About PureCyclePureCycle
Technologies LLC holds the exclusive global license to
commercialize the only patented solvent-based purification
recycling technology for restoring waste polypropylene into
virgin-like resin. This process, developed by The Procter &
Gamble Company (“P&G”), and commercialized by PureCycle, is
both more cost-efficient and environmentally sustainable than the
traditional manufacturing process of producing virgin
polypropylene, utilizing approximately 75% less energy1.
PureCycle’s Ultra-Pure Recycled Polypropylene (“UPRP”) has nearly
identical properties and applicability for reuse as virgin
polypropylene. PureCycle intends to obtain a Letter of No Objection
from the U.S. Food and Drug Administration for its UPRP to be used
in food grade applications.
Strong interest and broad global awareness of
PureCycle has resulted in strategic investments and
highly-attractive offtake agreements with notable groups including
Aptar, BMW i Ventures, Closed Loop Partners, Glockner Enterprises,
L’Oréal, Milliken & Company, P&G, Ravago, and Total. As a
result of this strong demand, PureCycle has contracted pricing for
its UPRP that is both de-linked from commodity pricing and at a
premium to virgin polypropylene resin. Combined with abundant
polypropylene waste feedstock, PureCycle expects to achieve EBITDA
margins in excess of 50% from the Company’s first seven plants in
2024.
The Company is building its first commercial-scale
plant in Ironton, Ohio, which is expected to have nameplate
capacity of approximately 107 million pounds per year when fully
operational. Production is expected to commence in late 2022 with
full capacity expected to be achieved in 2023. PureCycle raised
approximately $250 million in a tax-exempt municipal bond offering
in October 2020 to fund the construction of the Ironton facility.
The Company has long term contracts for feedstock to supply the
Ironton plant production and has entered into long term offtake
agreements with leading global customers and Fortune 500 partners
for all of the production of its UPRP from the Ironton
facility.
PureCycle intends to build new recycling production
facilities globally, with the goal of having 30 commercial lines
operational by 2030 and 50 by 2035. In addition to PureCycle’s
first plant in Ironton, Ohio, the Company expects to announce its
next location in Europe and to commence production in 2023 with a
nameplate capacity of approximately 107 million pounds when fully
operational. Additional expansion in the United States is expected
to include five scaled up commercial lines capable of producing
over 165 million pounds each of its UPRP. Pre-engineering for the
design and installation of five commercial lines in a single
“cluster” site is currently underway and will result in a combined
capacity of over 825 million pounds annually in one location.
Production from the Ironton, Europe, and cluster sites are expected
to bring over 1.2 billion pounds of annual recycled polypropylene
to the market in the next five years.
“This transaction represents a key milestone in
PureCycle’s mission to transform polypropylene into a recyclable
and sustainable product,” said Mike Otworth, CEO of PureCycle. “Our
recycling process produces virgin-like resin that we believe is
suitable for high-value, food-grade consumer products, and we
believe we are well-positioned to meet the consumer demand for
recycled content as well as global sustainability
mandates.2 The proceeds of this transaction are intended to
provide us with the balance sheet strength to accelerate the global
rollout of our proven technology addressing the immense global
problem associated with polypropylene waste. The current global
challenges surrounding polypropylene waste are significant. Of the
approximately 170 billion pounds of polypropylene waste produced
annually, less than 1% is recycled today; the remainder largely
ends up in landfills and the ocean, creating a massive
environmental problem. We look forward to partnering with the Roth
CH team on an efficient, accelerated path for a successful public
listing.”
Byron Roth, Chairman and CEO of Roth CH, said, “We
searched for a business combination that would not only be a
compelling growth company but could also benefit from the
relationships and experience of our two growth investment banks. We
believe PureCycle’s technology will be transformative in plastic
recycling and help companies meet their sustainability goals. We
look forward to sharing additional details on this exciting
transaction in the coming months. We appreciate all of our
shareholders and investors that have participated in the IPO and
PIPE transactions. We look forward to a successful future
together.”
PureCycle is retaining its experienced management
team, including CEO Mike Otworth, CCO David Brenner, and CFO
Michael Dee. Mr. Otworth has over 23 years of experience leading
and scaling early-stage companies. Mr. Brenner was PureCycle’s
first hire and has led PureCycle’s commercial expansion over the
last four years. Mr. Dee spent nearly three decades in public
markets, corporate finance, private equity and M&A in senior
roles at Morgan Stanley, Temasek Holdings and the Asian
Infrastructure Investment Bank.
____________1 According to Company internal
estimates; an independent Life Cycle Analysis (LCA) is planned to
occur in 20212 A No Objection Letter from the FDA is required to
claim resin is suitable for food grade use
Transaction Terms &
FinancingPursuant to the business combination agreement,
Roth CH will acquire PureCycle through a new Delaware holding
company, which will become a publicly-listed entity with an
ascribed pro forma equity value of $1.2 billion and an enterprise
value of approximately $826 million, subject to closing
adjustments. The transaction will be funded by (i) an issuance of
approximately $835 million of new common stock of Roth CH to
current holders of PureCycle, (ii) $76.5 million of funds from the
Roth CH trust account and (iii) funds from the $250 million PIPE at
$10.00 per share. Following the transaction and after payment of
transaction expenses, PureCycle is expected to add approximately
$667 million to its balance sheet – inclusive of the proceeds from
the $90 million in equity private placements and $310 million of
debt and convertible financings.
Founding and significant shareholders have agreed
to a contractual lock-up of 50% of their shares until the Ironton
plant is commissioned; 20% of their shares are released six months
after business combination closing, and the remaining 30% of their
shares twelve months after closing. Other current PureCycle equity
holders will be subject to a contractual lock-up that releases 33%
of their shares six months after closing, 33% of their shares
twelve months after closing, and the remaining shares at the
Ironton plant commissioning.
PureCycle will be entitled to receive an earnout of
two million shares if, after the six month anniversary of the
business combination close, and within three years from the
business combination close, PureCycle common stock is trading at a
closing price above $18.00 per share for 20 out of 30 consecutive
trading days. Additionally, PureCycle will also receive two million
shares upon final commissioning of the Ironton plant – as certified
by an independent third-party engineering company.
The business combination has been unanimously
approved by the boards of directors of both PureCycle and Roth CH.
The business combination is expected to close in the first quarter
of 2021, subject to regulatory and stockholder approvals and other
customary closing conditions.
For a summary of the material terms of the proposed
transaction, as well as a supplemental investor presentation,
please see the Current Report on Form 8-K filed by Roth CH today
with the U.S. Securities and Exchange Commission (the “SEC”).
Additional information about the proposed transaction will be
described in a registration statement relating to the merger, which
the newly created publicly-listed holding company, to be renamed
PureCycle Technologies, Inc. upon closing of the transaction, will
file with the SEC.
AdvisorsRoth Capital Partners,
Craig-Hallum Capital Group and Oppenheimer & Co. Inc. are
acting as placement agents for the PIPE transaction. Perella
Weinberg Partners and Oppenheimer & Co. Inc. are acting as
financial advisors to PureCycle. Jones Day is acting as legal
advisor to PureCycle and Loeb & Loeb is acting as legal advisor
to Roth CH.
WebinarRoth CH and PureCycle
management have made available a joint video webinar to discuss the
proposed transaction. To watch the video, click here and type in
the password: ROCHPURECYCLE2020!
The presentation accompanying the webinar can also
be accessed via Roth CH’s website at: RothCH.com.
About PureCycle Technologies
PureCycle’s ground-breaking, patented recycling process, developed
and licensed by Procter & Gamble (“P&G”) and commercialized
by PureCycle, separates color, odor and other contaminants from
plastic waste feedstock to transform it into Ultra-Pure Recycled
Polypropylene (“UPRP”) resin with virgin-like properties. The
PureCycle process creates an opportunity to fully close the loop in
the creation of recycled polypropylene (“rPP”), which, while being
one of the highest volume, most versatile and robust plastics, has
an extremely low reclamation rate across the globe.
PureCycle holds the possibility to solve for the
ongoing problem of recycling the approximately 170 billion pounds
of PP produced every year, which has averaged a 5% rate of growth
over the last five years. Consumer demand, combined with major
multinational sustainability commitments, reinforced by new
stringent recycled content restrictions and non-recycled plastic
taxes, have led to substantial interest in, and demand for,
PureCycle’s UPRP. Today there is virtually no UPRP in the market,
and PureCycle is the first company to solely focus on recycling and
reintegrating polypropylene upstream into high-value,
consumer-facing applications. To date, PureCycle has established
strategic partnerships and supply contracts across the plastics
value chain including, but not limited to, resin producers,
converters, and consumer facing brands.
The PureCycle technology is being brought to market
by a strong management team with deep expertise and a demonstrated
history of bringing disruptive technologies to market. Over the
last three years, PureCycle has built a series of strategic
partnerships with major multinational corporations and players in
the plastics industry and has memorialized demand commitments
through long-term contracts and letters of intent for almost four
times (4x) the output of its first production facility in Ironton,
Ohio.
PureCycle has been recognized by the American
Chemistry Council for its innovation in plastics recycling and,
more recently, was recognized by Time Magazine as one of the Top
100 Inventions of the Year in 2019. For more information, visit
purecycletech.com.
About Roth CH Acquisition I
Co.Roth CH Acquisition I Co. is a blank check company
incorporated for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar
business combination with one or more businesses. Roth CH is
jointly managed by Roth Capital Partners and Craig-Hallum Capital
Group. Its initial public offering occurred on May 4, 2020 raising
approximately $76.5 million. For more information, visit
www.rothch.com.
Additional Information and Where to Find
It The “Transaction Proxy Statement” has been filed
with the U.S. Securities and Exchange Commission (the “SEC”). Roth
CH urges investors, stockholders and other interested persons to
read, Transaction Proxy Statement as well as other documents filed
with the SEC because these documents will contain important
information about Roth CH, the potential target company and the
transaction. The definitive Transaction Proxy Statement will be
mailed to stockholders of Roth CH as of a record date to be
established for voting on the proposed transaction.
Forward Looking StatementsCertain
statements made in this release are "forward looking statements"
within the meaning of the "safe harbor" provisions of the United
States Private Securities Litigation Reform Act of 1995, including
statements about the parties’ ability to close the business
combination, the anticipated benefits of the business combination,
and the financial condition, results of operations, earnings
outlook and prospects of Roth CH and/or PCT and may include
statements for the period following the consummation of the
business combination. When used in this press release, the words
“plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,”
“estimate,” “forecast,” “project,” “continue,” “could,” “may,”
“might,” “possible,” “potential,” “predict,” “should,” “would” and
other similar words and expressions (or the negative versions of
such words or expressions) are intended to identify forward-looking
statements, but the absence of these words does not mean that a
statement is not forward-looking. The forward-looking statements
are based on the current expectations of the management of Roth CH
and PCT as applicable and are inherently subject to uncertainties
and changes in circumstances and their potential effects and speak
only as of the date of such statement. There can be no assurance
that future developments will be those that have been anticipated.
These forward-looking statements involve a number of risks,
uncertainties or other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by these forward-looking statements. These risks and
uncertainties include, but are not limited to, those discussed and
identified in the public filings made or to be made with the SEC by
Roth CH, including in the final prospectus relating to Roth CH’s
IPO, which was filed with the SEC on May 6 2020 under the heading
“Risk Factors,” or made or to be made by the newly created
publicly-listed holding company, to be renamed PureCycle
Technologies, Inc. upon closing of the transaction, and the
following: expectations regarding PCT’s strategies and future
financial performance, including its future business plans,
expansion plans or objectives, prospective performance and
opportunities and competitors, revenues, products and services,
pricing, operating expenses, market trends, liquidity, cash flows
and uses of cash, capital expenditures, and PCT’s ability to invest
in growth initiatives; PCT’s ability to scale and build the Ironton
plant in a timely and cost-effective manner; the implementation,
market acceptance and success of PCT’s business model and growth
strategy; the success or profitability of PCT’s offtake
arrangements; PCT’s future capital requirements and sources and
uses of cash; PCT’s ability to obtain funding for its operations
and future growth; developments and projections relating to PCT’s
competitors and industry; the occurrence of any event, change or
other circumstances that could give rise to the termination of the
merger agreement; the outcome of any legal proceedings that may be
instituted against Roth CH or PCT following announcement of the
merger agreement and the transactions contemplated therein; the
inability to complete the business combination due to, among other
things, the failure to obtain Roth CH stockholder approval; the
risk that the announcement and consummation of the proposed
business combination disrupts PCT’s current plans; the ability to
recognize the anticipated benefits of the business combination;
unexpected costs related to the proposed business combination; the
amount of any redemptions by existing holders of Roth CH’s common
stock being greater than expected; limited liquidity and trading of
Roth CH’s securities; geopolitical risk and changes in applicable
laws or regulations; the possibility that Roth CH and/or PCT may be
adversely affected by other economic, business, and/or competitive
factors; operational risk; risk that the COVID-19 pandemic, and
local, state, and federal responses to addressing the pandemic may
have an adverse effect on Roth CH’s or PCT’s business operations,
as well as Roth CH’s or PCT’s financial condition and results of
operations; and the risks that the consummation of the business
combination is substantially delayed or does not occur. Should one
or more of these risks or uncertainties materialize or should any
of the assumptions made by the management of Roth CH and PCT prove
incorrect, actual results may vary in material respects from those
projected in these forward-looking statements. Neither Roth CH nor
PCT undertakes any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
The supplemental EBITDA information provided in
this press release should not be considered in isolation or as a
substitute for GAAP. No reconciliation of the forecasted EBITDA
margin or EBITDA generation for 2024 is included in this press
release because Roth CH and PCT are unable to quantify certain
amounts that would be required to be included in the corresponding
GAAP measure without unreasonable efforts. In addition, Roth CH and
PCT believe such reconciliations would imply a degree of precision
that would be confusing or misleading to investors.
Participants in the
Solicitation Roth CH and its directors and executive
officers may be considered participants in the solicitation of
proxies with respect to the potential transaction described herein
under the rules of the SEC. Information about the directors and
executive officers of Roth CH and a description of their interests
in Roth CH will be contained in the transaction proxy statement
when it is filed with the SEC. These documents can be obtained free
of charge from the sources indicated above. PCT and its directors
and executive officers may also be deemed to be participants in the
solicitation of proxies in connection with the potential
transaction described herein. Information regarding the
participants and their interests in the proposed transaction will
be included in the proxy statement.
Non-SolicitationThe disclosure
herein is not a proxy statement or solicitation of a proxy, consent
or authorization with respect to any securities or in respect of
the potential transaction and shall not constitute an offer to sell
or a solicitation of an offer to buy the securities of Roth CH, nor
shall there be any sale of any such securities in any state or
jurisdiction in which such offer, solicitation, or sale would be
unlawful prior to registration or qualification under the
securities laws of such state or jurisdiction. No offer of
securities shall be made except by means of a definitive
document.
Contact
Information
Roth CHJohn Lipman, COOCraig-Hallum Capital
GroupJohn.lipman@craig-hallum.com
IR Contact:Cody Slach, Senior Managing
DirectorGateway Investor Relations(949)
574-3860ROCH@GatewayIR.com
PureCycle Technologies, LLC Amy Jo
ClarkDirector, Corporate
Communications317-504-0133aclark@purecycletech.com
Lindsay Linglepress@purecycletech.com
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