Recylex completes financing arrangement

The Recylex Group, a recycling company based in France with a significant presence in Germany and Belgium, has completed a financing package that will provide it with €67 million ($70 million) to assist with the company’s German subsidiaries. The financing comes from a consortium of German banks.

Recylex, with 10 production sites, is focused on recycling lead and plastics from automobile and industrial batteries. Additionally, the company’s operations include recycling zinc generated in the production of electric steel plates. The company also is involved with producing zinc oxides and special metals for the electronics industry.

The investment will include €40 million ($42 million) to build a new lead reduction furnace at its Weser-Metall GmbH facility in Germany that will recover lead and silver contained in certain by-products generated at its smelters.

Recylex says the reduction furnace will be the first of its kind in Europe.The furnace should increase the company’s annual lead production by at least 30,000 tonnes and will replace the volumes of byproducts currently sold outside the group. One source says that Recylex’s lead business accounts for 75 percent of the company’s revenue.

In addition, Recylex SA, the group’s parent company, has arranged a new equity line with Kepler Cheuvreux. The company says the new credit line will increase its ability to cover the cash requirements arising from its ongoing operations.

In a news release, Yves Roche, chairman and CEO of the Recylex Group, says, “The closing of the financing agreements in Germany represents a major step forward in our strategy to put the lead segment’s business model on a sustainable footing. The purpose of the new furnace is to improve our profitability in the lead segment and across the group as a whole. In addition, it will give us greater flexibility on the procurement front, enabling us to source materials producing higher margins.”

Roche continues, “Construction work can now begin. I would like to congratulate all our financial and operational teams. They have been working hard for many months on this project, which is crucial for our future. Furthermore, the renewal of the equity line financing in France aims to restore Recylex SA’s financial flexibility. In particular, it will support the current favorable trend of scrap battery purchases.”

The €67 million in financing will consist of €15 million in credit lines (€10 million to refinance existing credit lines and €5 million to extend the credit lines) and €2 million to renew the bank guarantees required for industrial activities, repayable by 31 October 2021.

The €50 million in investment spending projected by Recylex’s German subsidiaries will help the company get the subsidiary on solid financial ground.

The company also notes that during the construction and startup phase of the new reduction furnace, Glencore International AG, which owns a 32% stake in Recylex, will cover any overruns in the furnace’s construction, up to €10 million, and potential specific liquidity needs, up to maximum €25 million.

This should improve the lead smelter's industrial flexibility, as it will be able to handle primary and secondary materials that have a lower lead content but are more profitable, thereby optimising and expanding its sourcing opportunities.

Construction work is scheduled to begin in the first quarter of 2017, and the objective is to begin operational testing during the first half of 2018, ahead of a ramp-up process.