May 21, 2020: A German sub-group of the French lead battery recycler Recylex has applied for so-called protective shield measures — similar to the US Chapter 11 bankruptcy law — as a result of the Covid-19 virus, the company said on May 14.
The German subsidiaries are Weser-Metall, a secondary lead smelting firm, Harz-Metall, a lead and zinc recycler, zinc oxide and dust producer Norzinco and chemicals company PPM Pure Metals, which focuses on high purity metals.
It means Recylex will be left with its lead-acid battery recycling operations, Recylex A and C2P SAS, plus a 50% stake in Recytech SA, from which it will still supply Weser-Metall.
Protective shield measures became law in Germany in 2012. They give time to existing management, working with an independent supervisor, to restructure and find a way out of financial difficulties.
The firm updated its financial situation on May 13. This showed its net debt stood at €44.3 million ($49 million).
Recylex SA’s gross debt amounted to €52.8 million. This amount includes the €16 million loan from Glencore International, the EU commission cartel fine with €24.6 million and other financial debts of €12.2 million (including a debt of €2.8 million to Recylex GmbH) resulting from the Continuation Plan procedure which ended in 2015. Its net cash position amounted to €8.5 million.
“The rapid developments caused by the SARS-Cov-2 [Covid-19] pandemic have effects we can no longer influence,” said Recyclex chairman and CEO Sebastian Rudow.
“The slump in the zinc price and the deteriorating economic outlook are now taking away the going concern perspective of Harz-Metall. As a result, the entire German management has been forced by German law to rule for insolvency for all German companies of the group.
“With the protective shield procedures, the operationally active entities of the German subgroup will be entering a new path to face the challenges of the SARS-CoV-2 pandemic. I am expecting that the special restructuring benefits provided by German law in these procedures will enable the entities to continue their business operations and to pursue their restructuring according to a path individually chosen by them.
“The improvement of our processes, the establishment of new customers and above all sustainable profitability are the primary targets to secure the foundation of the Group within its reduced perimeter and to be empowered to build on it with future investments.
“In the short term, however, Recylex SA has to find solutions to be able to pay off its debts in the future and, at first, to subsist the pandemic.”
Recylex, which donated protective gowns and masks to the Villefranche Hospital in Saone, France to help fight the virus, has also asked mining company Glencore to extend the term of a €16 million loan to the recycler.