Debt-laden PET Producer Files for U.S. Bankruptcy

SEATTLE (Scrap Monster): The US units of Italian plastics major Mossi Ghisolfi has filed for bankruptcy in the U.S. Bankruptcy Court in Delaware. The company has already shut down the production facilities in the US and Mexico. Also, it has halted construction works at its Corpus Christi, Texas plant under construction, which upon completion would have been the world’s largest PET plant.

Earlier during last week, the company’s parent group had filed for bankruptcy protection in Italy. The filing was made with the Tribunal of Alessandria for an in-court settlement with its creditors. Following this, several of the company’s business units filed for Chapter 11 bankruptcy protection in the US court.

The company has long been working on building the world’s largest PET resin manufacturing facility in Corpus Christi, Texas. The plant was supposed to commence operations in 2016. However, long work delays on account of several factors didn’t work in favor of the company. The total spending at the plant has already exceeded the budget. It was initially planned to spend $1.1 billion to build the plant, but even after a total spending of $1.86 billion to date, another 15% of the works are still pending. According to the company, it needs to spend at least another $505 million to complete the plant construction.

According to Mossi Ghisolfi, the labor costs averaged to approximately $104 per hour, almost double of what had been budgeted. In addition to low productivity of workers, the construction was delayed further due to back out of subcontractor. Also, Hurricane Harvey- the environmental disaster that shook Texas during the month of August had badly impacted construction works at the plant.

In its court filings, the company noted that it had a financial debt of around $1.7 billion. The leading lender is the Industrial and Commercial Bank of China Ltd, which had provided the company with an unsecured credit facility amounting to $350 million. The company also owes $250 million to raw material suppliers, it stated.

Mossi Ghisolfi has pledged its assets in securing $100 million DIP financing from a Mexican lender. This gives the company three months time for taking bids for its unfinished Corpus Christi facility. As per media reports, several conglomerates including Indorama Ventures of Thailand, Reliance Industries of India and Alpek SAB de CV of Mexico have already expressed their interests on the company’s US assets.