Business Context and Reporting Period
This Form 8-K was filed by Loop Industries, Inc. on October 29, 2020, reporting a material event occurring on the same date. The Company is an emerging growth company incorporated in Nevada, developing technology to recycle PET plastic.
Key Financial Metrics
This filing is a current report regarding a contractual termination and does not contain financial statements. Consequently, specific values for revenue, profit, cash flow, margins, debt, and liquidity are not provided in this document.
Material Changes
- Termination of Supply Agreement: Coca-Cola Cross Enterprise Procurement Group (CEPG) notified Loop Industries of its intention to terminate the Master Terms and Conditions Supply Agreement (MTC) dated November 14, 2018.
- Effective Date: The termination is effective December 14, 2020.
- Reason for Termination: CEPG cited the Company's failure to satisfy the first production milestone from its joint venture facility by July 2020 as required by the MTC.
- Future Engagement: CEPG indicated interest in exploring a new framework agreement for North America and/or Europe.
Outlook, Risks, and Management Commentary
- Project Delays: The Company previously expected to commission the joint venture facility in Spartanburg, South Carolina, in Q3 2021. This timeline is now expected to be delayed.
- Cause of Delays: Delays are attributed to the Covid-19 pandemic and continued border closures and quarantine requirements between Canada and the U.S.
- Management Action: The Company intends to engage with CEPG regarding the joint venture facility once there is more clarity on commissioning, as well as for the planned Infinite Loop European project.
Key Facts for Investor Verification
- Verify the revised timeline for the commissioning of the Spartanburg, South Carolina joint venture facility.
- Monitor communications regarding the potential new framework agreement with Coca-Cola.
- Assess the impact of the terminated MTC on the Company's projected revenue and cash flow.
- Review the status of the Infinite Loop European project mentioned by management.