Recylex S A : Filing for the opening of Court-ordered reorganization proceedings (“redressement judiciaire”) and the implementation of a disposal plan for the Group’s industrial assets (“prépack cession”), following the failure of the debt restructuring

15 April 2022 - 8:45 am

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Filing for the opening of Court-ordered reorganization proceedings ("redressement judiciaire") and the implementation of a disposal plan for the Group's industrial assets ("prépack cession"), following the failure of the debt restructuring

Recylex S.A. (Euronext Paris: FR0000120388 - RX) (the "Company") notes, in light of the offers received in the context of the asset disposal process that the Company had initiated in May 2021, that (i) it will not have sufficient financial resources to allow a debt restructuring in an amicable framework, and (ii) it will be impossible to implement the envisaged asset disposal program in an in bonis1 framework.

The offers received by the Company to date are as follows:

•  An offer for the Escaudoeuvres and Villefranche-sur-Saône industrial sites and the shares of the subsidiary C2P S.A.S. for less than €2.5 million, allowing the preservation of the business and jobs (60 jobs in total);

•  Two offers for the 50% stake in Recytech S.A. for a total of €40 million, this stake being subject to a first and second ranking pledge in favour of Glencore International AG;

•  Offers valuing the discontinued Estaque site for an amount of less than €0.5 million (on the assumption of environmental rehabilitation obligations taken over by the potential buyer).

This compares with total net debt of €52.2 million, plus provisions for environmental risks and liabilities of €16.2 million2, for a total of €68.4 million. The Company does not expect to receive any further offers in view of the extensive due diligence undertaken to find potential buyers.

This asset disposal process was part of an amicable prevention procedure (conciliation), which has been underway for several months, at the initiative of the Company, and which will end on April 15, 2022, without a debt-restructuring plan having been approved.

In addition, a significant portion of the Group's debt will also become due after April 15, 2022.

As a result, the Company will be in a state of cessation of payments and is preparing to file for reorganization proceedings ("redressement judiciaire") before the Paris Commercial Court, under the conditions provided for by law3.

The Company notes that the conditional offer received from Campine NV for the two industrial sites (including its subsidiary C2P S.A.S., located at the Villefranche-sur-Saône site) is likely to maintain the activities of the Group's industrial sites and the associated jobs. However, it is still uncertain whether these conditions will be met.

This offer remains subject to an agreement between Campine NV and the French government on the amounts of the financial guarantees that the buyer would have to put in place in the event of the takeover of the operation of these two sites, which are classified as "Seveso".

If the Court grants the request for the opening of reorganization proceedings ("redressement judiciaire"), this procedure will allow the examination by the Court of the offer received from Campine NV and the study of a judicial solution for the restructuring of the Company's debt.

As this is the only offer for the industrial sites, the Company will request that Campine NV's offer be examined by the Paris Commercial Court according to the "prépack cession" procedure - which implies, in particular, an accelerated timetable - in order to limit the consequences on the activity and employment at the industrial sites.

The asset disposal process carried out by the Company since May 2021, in parallel with the process of restructuring its debt, is thus in the hands of the Paris Commercial Court.

In the event of the opening of reorganization proceedings ("redressement judiciaire") it should be noted, however, that, given the importance of the debts and other liabilities, and the low value of the assets resulting from the offers received, the prospects of the adoption of a reorganization plan ("plan de redressement"), in parallel with the envisaged "prépack cession", remain uncertain.

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The Company reiterates below in more detail the announcements made today:

• 1. Offers received for the Company's assets;

• 2. Inability to present a debt restructuring plan in an amicable framework;

• 3. Examination by the Paris Commercial Court of the offer received for the industrial sites in the context of the asset disposal process ("prépack cession").

1.

Offers received for the Company's assets

The Company's only assets to date are the following4:

•  The Villefranche-sur-Saône and Escaudœuvres sites for the recycling of used lead-acid batteries, as well as the polypropylene waste recycling business of the subsidiary C2P S.A.S. located at the Villefranche-sur-Saône site;

•  the 50% stake in Recytech S.A.;

•  Discontinued mining and industrial sites, including the Estaque site in Marseille.

Offer for the Villefranche-sur-Saône and Escaudœuvres sites

The structured and competitive sales process conducted by the Company since May 2021 has enabled to identify and approach, through the intermediary of the investment bank ODDO BHF Corporate Finance, nearly 80 potential investors, to finally obtain a single offer for the Group's "lead" and "plastics" operations.

This offer from Campine NV, a Belgian company listed on Euronext Brussels, would ensure the takeover of all the industrial activities and almost all employees of the Villefranche-sur-Saône and Escaudœuvres sites, including C2P S.A.S. (via a takeover of the corresponding stake), while providing a new overall industrial vision for the years to come.

This offer is likely to promote the sustainability of activities and jobs at sites that are fully committed to the lead and plastic waste recycling economy.

The proceeds from the sale of all the industrial activities being less than €2.5 million, notably because of the significant investments to be made at these two sites, it would not contribute significantly to the restructuring of the Group's debt

At the date of publication of this press release, the offer received remains subject to certain conditions related to the level of the overall amount of the environmental financial guarantees to be provided by the buyer, in accordance with the provisions of articles L.516-1 and L.516-2 of the French Environmental Code. Discussions are currently underway between the Government departments concerned and the potential buyer. Given the nature of these conditions, the Company is not currently in a position to comment on the fulfilment and lifting of these conditions, which are beyond the Company's control.

Offers concerning the discontinued Estaque site

The discontinued Estaque site has been the subject of an environmental remediation program for several years. The Company has received proposals to acquire this site with a tiers demandeur mechanism5 that would allow a significant portion of the remaining remediation costs to be transferred to the buyer. The expected proceeds from the sale would be less than €0.5 million and would not contribute significantly to the restructuring of the Group's debt.

Offers for the stake in Recytech S.A.

The Company has received indicative offers of up to €40 million for its 50% stake in Recytech S.A. The proceeds from the sale of this stake are expected, based on the offers received, to be fully received by Glencore International AG, as the Company's main creditor and beneficiary of a first and second ranking pledge on the Company's stake in Recytech S.A. (it being specified that the amounts guaranteed by these pledges amount to €47.1 million as of March 31, 20226). These offers are not likely to enable the Company's debts to be restructured and, by extension, its activities and jobs to be maintained.

2.

Inability to present a debt restructuring plan in an amicable framework

Gross financial debt and other liabilities amount to 82.3 million euro to date, as summarized below:

As consequence, the offers received do not provide the Company with sufficient financial resources to consider restructuring its debt.

The imminent expiration and the failure of the current conciliation procedure, as well as the payability of a large part of the debt after April 15, 2022, will lead the Company to declare a situation of cessation of payments under the conditions provided for by law and to request the opening of a Court-ordered reorganization proceedings ("redressement judiciaire") in which the sale of the "lead" and "plastic" operations could be ordered by the Court.

2.1.

Significant debt and liabilities inherited from the past

Net financial debt

As of March 31, 2022, the Company's net financial debt amounted to €52.2 million (excluding IFRS 16 rental debt).

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