Renewcell Gets More Time to Find Buyer While Lenzing Losses Balloon
Renewcell has been given a stay of execution—for the moment, at least.
The embattled Swedish textile recycler now has until March 28 to receive a written, non-binding and indicative bid on all or parts of its assets, a promising sign, insiders say, that there may be bites from potential new owners who want more time to suss out the factory in Sundsvall.
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“The extension is deemed to be in the best interest of the creditors, as more interested parties will be able to take part in the sales process and place indicative bids,” said Lars-Henrik Andersson, whom the Stockholm District Court appointed as Renewcell’s administrator. “The bankruptcy estate aims to conclude the sales process as soon as possible thereafter.” He expects transactions to close on April 10.
But Renewcell’s team in Stockholm will be laid off as of the 26th, with some being let go earlier. Some of its American employees are still waiting to confirm their contracts.
Tricia Carey, chief commercial officer at Renewcell, and one of the aforementioned Americans, told Sourcing Journal, however, that she was optimistic about the company’s sale. Support from the innovation community has also been overwhelming. On Monday, forestry nonprofit and “next-generation” fiber champion Canopy organized a closed-door webinar, dubbed “Mission Critical for Renewcell,” for brands that can throw their support behind circular man-made cellulosic fibers like Circulose, calling it an “all hands on deck” moment for the sector. Existing buyers of the dissolving pulp and blended fiber are, for the most part, staying the course as well.
“The majority of brands we have been in contact with are continuing their orders and developments,” she said. “With the support of Canopy, Fashion For Good and Accelerating Circularity, we are working together to unlock the challenges that exist for developing innovative next-gen materials at scale.”
It’s been a heady time for next-gen cellulosics, which are positioned as an alternative to rayon and viscose stemming from deforestation. While Finland’s Infinited Fiber Company, which plans to begin construction on its first commercial plant sometime in the next two years, clinched 40 million euros ($43.5 million) in funding from new investors such as Zara owner Inditex, TTY Management and Youngone last week, fellow—and further-along—Finn Spinnova revealed Thursday that high operating costs and disappointing revenues are resulting in a negative cashflow generation.
The latter news, which was accompanied by a management shakeup, is eerily similar to what happened with Renewcell, which was working with Spinnova to develop a “first of its kind” textile waste-based fiber that can be spun and respun without hazardous chemicals. The first consumer products made with the fiber were earmarked for the end of 2024. Pulp giant Suzano, which opened a joint venture “smart” factory with Spinnova in Jyväskylä last year, is still on track to construct a new wholly-owned production facility for churning out Spinnova fibers. But the planned ramp-up has taken longer than anticipated, said CEO Tuomas Oijala.
“We are making progress step by step on our journey to increase the production volumes of Spinnova fiber and to bring the fiber to the market in product applications through our committed supply chain and brand partners,” Oijala said. “[But] it is clear to me that macroeconomic trends, constraints in the global fiber supply chain and the need for the textile industry to meet its sustainability targets present us with a significant and inspiring opportunity to capture.”
On Friday, Lenzing Group reported an after-tax loss of 593 million euros ($645.9 million) in 2023, a more than thousand-fold decrease from the 37.2 million euros ($40.5 million) it ceded in 2022. In a statement, the Austrian Tencel purveyor blamed “very subdued demand” and the “continued rise” in raw material and energy costs for exerting a “strongly negative impact.” On the plus side, the performance program it implemented to free up cash and strengthen revenue is ahead of schedule.
“The anticipated recovery of markets relevant to the Lenzing Group has failed to materialize to date,” said CEO Stephan Sielaff. “Subdued demand and the still sharply increased raw material and energy costs have led to a result in 2023 that we are not satisfied with. This makes the measures we have taken decisively and at an early stage to keep Lenzing on track and further boost its resilience to crises all the more significant.”
