PureCycle Technologies (PCT) - Another SPAC Disaster
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Dear Reader,
We’re back again to discuss another SPAC disaster. This situation admittedly first caught my attention not by the OpTrack database, but because of John Hempton’s public spat on Twitter with some PCT bulls.
That piqued my curiosity enough to look up PCT specifically in the database with a little manual labor around the edges. And to jump right to the chase: we think Hempton has the edge here.
PCT Business Overview
Here is the first paragraph of PCT’s business description from their last 10-K:
“PCT is commercializing a patented purification recycling technology (the “Technology”), originally developed by The Procter & Gamble Company (“P&G”), for restoring waste polypropylene into resin with near-virgin characteristics, called ultra-pure recycled (“UPR”) resin, which has nearly identical properties and applicability for reuse as virgin polypropylene. PCT has a global license for the Technology from P&G. We are currently building our first commercial scale recycling facility (the "Ironton Facility"), which is expected to have capacity of approximately 107 million pounds/year when fully operational. Production is expected to commence in late 2022 and the plant is expected to be fully operational in 2023. Our goal is to create an important new segment of the global polypropylene market that will assist multinational entities in meeting their sustainability goals, provide consumers with polypropylene-based products that are sustainable, and reduce overall polypropylene waste in the world’s landfills and oceans.”
If you know what any of that means, congratulations. Per usual, we’re not going to focus on the business. We’re focused on the people here at OpTrack. My key takeaway from the paragraph above is that this company is a science experiment and it’s a “trust me” story. So let’s take a look at players involved here that you’re trusting.
PCT People Overview
Slightly unusual for what we do at OpTrack, today we’re going to start with looking at someone who used to be involved with the business.
The first person we want to look at today is Michael Otworth. Mike was the CEO of Chairman of PCT from 2015 to 2022. According to Capital IQ he remains a 2.5% shareholder as well (but I believe he could have sold his stock since leaving the company without reporting it). Despite not being at the company anymore, I believe Mike deserves some scrutiny as PCT was incorporated in 2015, so PCT is Mike’s baby and he was at the helm for >90% of the company’s life-to-date.
Mike’s corporate track includes a couple of investment firms:
Co-founder and Chairman of XL Vision, which filed for Chapter 7 in 2001
“Various C-Level Role's” of XL TechGroup which went public in 2004 and has been dormant since 2008
Innventure - this appears the current investment vehicle Mike is running, which own ~5% of PCT
Between these investment firms collectively, we find 5 other associated public companies:
Chromavision Medical Systems
eMerge Interactive
AgCert
PetroAlgae
TyraTech
The first 4 companies listed all either filed for bankruptcy or had their equity securities delisted and cancelled. The last was acquired after declining >90%.
Miscellaneous Other People-Related Red Flags:
This company was taken public via SPAC
The firms that ran the SPAC were low quality brokers - Roth and Craig-Hallum
We’d say given the origins PCT, Hempton has the upper hand here.
Disclaimer: Please remember this post should not be taken as investing advice and please consult a licensed financial advisor before making any investment decisions. The OpTrack team did its best to present everything above in a factually accurate and unbiased way, but there is always room for error in biographical data on executives. There may be mistakes of omission or commission in the above - if you find one - please reach out to OpTrack@OpTrack.io so that we can correct it.