Rewewcell begins review to seek more funding

STOCKHOLM – Swedish textile recycling company, Renewcell, has begun a strategic review to seek more funding as it continues to experience sluggish sales. Renewcell has developed a process which recycles cellulosic-rich clothing such as jeans and produces dissolving pulp (the company’s flagship product, ‘Circulose’). This pulp can be used to make man-made cellulosic fibres (MMFCs) such as viscose, lyocell, modal, acetate other types of regenerated fibres which can be spun into yarns, woven or knitted into fabrics. 

The company’s manufacturing plant has a 60,000 tonne annual capacity and Renewcell had plans to double this moving forwards. However, up until the end of September, the business had sold just 14,400 tonnes of Circulose.

Sales were poor in October and the business says sales volumes in November are now expected to be lower than previously anticipated and in line with October sales volume.

“Discussions are ongoing with a number of customers to secure orders, but it is uncertain when they will materialise,” the company said in a trading statement.

“Therefore, Renewcell hereby announces that its [board] has decided to immediately initiate a strategic review to explore and evaluate various funding alternatives. As part of this process, the Board of Directors will consider all potential alternatives to secure funding and optimise shareholder value. Such alternatives may include additional debt funding, equity injection through the form of a rights issue, equity injection through a directed issue targeted to a financial or strategic investor or other possible strategic transactions.”

In a show of support in late October, Zara owner Inditex (ITX.MC), the world’s largest clothing retailer, said its suppliers purchase 2,000 metric tons Circulose.

H&M invested and became a shareholder in Renewcell in 2017. The company has since signed a five-year, 10,000 tonne deal with the company.

Many other brands and retailers have launched capsule collections containing Circulose. These include Levi’s, Inditext (Zara), Ganni, Pangai, Filippa K, and Bestseller (Vero Moda). 

Renewcell has also established major business relationships with several of the world’s leading viscose manufacturers, its main customer base. These include Austrian-based Lenzing, Chinese viscose manufacturer Tangshan Sanyou, US cellulosic acetate fibre producer, Eastman (for a collaboration to develop Naia Renew ES yarns sourced from Circulose), Indian viscose giant Birla Cellulose, the pulp and fibre business of Grasim Industries, a flagship company of the Aditya Birla Group, and Daiwabo Rayon Co. Ltd., a leading Japanese cellulosic fibre maker.