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Danimer, PureCycle update investors

The two SPAC firms, targeted by short sellers, give updates on production

by Melody M. Bomgardner
May 19, 2021 | A version of this story appeared in Volume 99, Issue 19


This photo shows Danimer Scientific's manufacturing facility in Winchester, Kentucky.
Credit: Danimer Scientific
Danimer is producing PHA bioplastics at this plant in Kentucky.

Two sustainable polymer firms, Danimer Scientific and PureCycle, have updated investors on their businesses amid claims by short sellers that the companies are promising more value than they can deliver.

Both companies recently went public via mergers with special purpose acquisition companies, or SPACs. For Danimer, its December 2020 merger was followed in April and early May by reports from the short seller Spruce Point Management claiming Danimer exaggerated its production capacity as well as sales volumes and prices.

In a first-quarter earnings report, Danimer says production of its polyhydroxyalkanoate (PHA) resins reached 50% of capacity at its facility in Winchester, Kentucky. As a result, revenues grew 24% to $13.2 million, compared to the first quarter of 2020. Danimer says production will reach 100% of current capacity by the end of this year and that an expansion will come online in the second quarter of 2022. A larger facility in Georgia is in the works.

Overall, Danimer had a net loss of $94.7 million for the quarter, which is in line with expectations, says Laurence Alexander, a stock analyst for Jefferies Financial Group, in an investor note. He says the firm hit key benchmarks, has a strong balance sheet, and will easily sell its output as demand dwarfs available capacity in the bioplastics industry.

PureCycle, which is getting into polypropylene recycling, had been slammed by Hindenburg Research for past bankruptcies involving its leaders and a lack of peer-reviewed research on its technology, which it licensed from Procter & Gamble.

PureCycle updated investors on its plant but delayed issuing a full financial report. The firm says construction is on track in Ironton, Ohio, and that it has $570 million in cash on hand. It says a demonstration facility has operated successfully for 2 years and run 350 tests on diverse waste polypropylene feedstocks.



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