The proprietor of a Texas facility that recycles metals extracted from oil-refinery waste filed for chapter after the enterprise was marred by gear failures and commodity worth volatility.
Aleon Metals LLC, which is liable for $294 million of municipal debt that financed the development of the recycling plant and one other below growth, filed for Chapter 11 Sunday in US Chapter Courtroom for the Southern District of Texas.
Aleon mentioned it secured $188 million of financing from bondholders to proceed operations whereas it seeks a purchaser through the chapter proceedings. Jefferies Monetary Group Inc., Aleon’s funding banker, will market the companies.
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“We’ve labored diligently to streamline our operations and place Aleon for continued progress,” mentioned Tarun Bhatt, the chief govt officer of Aleon, mentioned in a assertion.
The corporate funded the Freeport, Texas, operation with a sequence of bond points from 2019 by way of 2023 by way of the Brazoria Industrial Improvement Corp., a authorities company that helps such tasks receive financing.
The bonds carried rates of interest as excessive as 12%, reflecting the dangers, and have since tumbled in worth. The senior bonds — which have the very best authorized protections — are valued at about 70 cents on the greenback, with others pegged at lower than half that, in accordance with Bloomberg’s bond-pricing service.
Different recycling tasks financed within the municipal-bond market have been stricken by a spread of points lately, together with lower-than-expected demand, operations setbacks and ballooning manufacturing prices.
In Aleon’s case, vanadium and molybdenum, the first metals recovered on the oil-recycling plant, had been topic to vital volatility in commodity costs, leading to unpredictable income streams and durations of unfavorable money stream, in accordance with the chapter submitting.
As well as, the scrubber that eliminated sulfur dioxide from gases failed, inflicting manufacturing to plummet. Quantity on the facility dropped to about 2,131 tons a 12 months, far beneath its 55,000 ton capability.
The case is In re Aleon Metals, LLC, et al, quantity 25-90305, Chapter Courtroom, Southern District of Texas.
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