Court documents indicate the plant is operating at a fraction of its capacity and that the parent company is no longer willing to provide free-flowing capital to the site. As a result, Brightmark is looking to sell the facility, even as the parent company continues with ambitious expansion projects elsewhere.
In a statement, Brightmark says the Ashley, Indiana, plant will continue operating as it has been without disruption, despite the financial shuffling.
Brightmark CEO Bob Powell said the move “allows us to take control of our future” and that it is “designed to ensure the long-term viability of the Ashley facility and enables us to grow our business sustainably.”
Multiple business entities of the San Francisco-headquartered company filed for Chapter 11 bankruptcy on March 16: Brightmark Plastics Renewal, Brightmark Plastics Renewal Indiana and Brightmark Plastics Renewal Services. The cases are being jointly administered because they are linked by the same parent company.
Chapter 11 indicates the companies plan to reorganize to pay debts rather than shut down and liquidate assets. They reported $178.3 million in debt related to the Indiana plant and assets of between $100 million and $500 million.
The filing came two weeks after Brightmark failed to make a $12.9 million payment on debt owed to UMB Bank, leading the bank to issue a notice of default.
Court documents indicate Brightmark last month determined a restructuring would likely be necessary, and the company decided it would no longer provide ongoing unsecured funding to the facility and would instead provide capital through loans until the facility can be sold.
Early entrant in emerging market
The Indiana plant was an early player in the recent wave of chemical recycling projects, initially announced by RES Polyflow in 2015. It was originally framed as a plastics-to-fuel plant that would take in mixed plastics and produce diesel and gasoline blendstocks. More recently, the company has positioned the facility as processing mixed plastics into feedstocks that will go into new plastic production.
In 2018, Brightmark Energy acquired a majority interest in RES Polyflow, aiming to bring the technology to a commercial stage.
In 2019, Brightmark closed on $260 million in financing for the Indiana facility, including $185 million in green bonds. The company broke ground on the plant that same year, and by mid-2020, the Indiana facility had started up and was running test loads of material.
It’s the 2019 financing that was wrapped up in the recent financial hurdles. Parent company Brightmark has been footing the bill for all costs at the facility – to date, Brightmark has funded the plant with $211 million in equity contributions, including $44.6 million in 2024 alone, according to court documents.
Brightmark Plastics Renewal reported its Indiana pyrolysis plant “is only operating at five percent capacity and does not generate sufficient revenue to fund” facility operations, according to court documents. The facility costs $3.5 million to $4 million per month for “operations and improvements.”
As of mid-2024, the facility had the capacity to process 200 million pounds per year but had processed a total of 4 million pounds since it opened four years earlier, the company told Plastics Recycling Update last year.
And even as it is running at a low operating rate, the company has also been working to expand the Indiana plant’s capacity, a “capital-intensive project necessary to make the (facility) financially viable.”
All of that adds up to a lot of ongoing capital cost with little current return. And it comes as Brightmark is developing an additional $950 million facility in Thomaston, Georgia – a project Brightmark says isn’t affected by the Indiana bankruptcy filing.
Auction and sale incoming
In court documents, Brightmark Plastics Renewal wrote that “after facing financial challenges,” the debtors began looking at sale possibilities. The companies hired SSG Capital Advisors to explore other financing options and, when none panned out, to oversee the sale process. They proposed a timeline that would have an initial bid (known as a “stalking horse” agreement) submitted by April 16, additional bids in by May 5 and a sale consummated by May 16.
SSG “has begun an initial outreach to potential strategic and financial buyers and intends to contact 287 parties, including strategic buyers, private equity funds, and other financial institutions, that are reasonably likely to be interested in consummating a proposed sale,” Brightmark Plastics Renewal wrote.
The company added it anticipates the sale will involve “a robust auction process.”
