Renewcell explained its decision to conduct a strategic review follows lower-than-expected sales volumes to fibre producers in its third quarter as well as subdued sales in October.
The company added that its anticipated sales volumes for November were projected to align with the lower than expected figures in October.
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It stated that discussions with potential customers are ongoing, however the timing of when orders will be secured remained uncertain.
The company, which produces a trademarked dissolving pulp made from 100% textile waste called Circulose, generated a net loss of SEK94.5m ($8.68m) between July and September 2023 – somewhat far from its hope of reaching break-even on a cash flow basis by the end of the year.
Magnus Håkansson, Renewcell’s acting CEO, said at the time of the third quarter results that, while the company had the capacity to produce sufficient volumes (4,000 tonnes per month) to break even, “the demand in terms of hard orders from the brands is coming along with less urgency than we had expected”.
Håkansson initially dismissed an analyst’s suggestion that price discounts might help the company’s products move through the value chain quicker, saying that it would be “financially unsustainable”.
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By GlobalDataHowever, to explore avenues for additional funding, Renewcells’s board of directors are now considering various funding alternatives.
The company said it remains committed to optimising shareholder value through this strategic review, which may involve considering additional debt funding, equity injection via a rights issue, equity injection through a directed issue to a financial or strategic investor, or other possible strategic transactions.
Although the board of directors has not set a specific timeline for the completion of the review, the company states the process will be initiated immediately.
Renewcell said that in compliance with ongoing disclosure obligations pursuant to applicable laws and regulations it has committed to providing updates on the strategic review only when a final decision is reached by the board.
To facilitate the comprehensive evaluation of options, Renewcell has engaged ABG Sundal Collier as its financial advisor and appointed Vinge as its legal advisor for the review process.
Renewcell said it has created a patented process for 100% textile-to-textile recycling and has invested over SEK1.3bn to establish a recycling facility in Ortviken.
The industrial scale facility has the capacity to produce up to 60,000 tonnes of recycled textiles annually.
