At the end of February, Agilyx and AmSty announced their polystyrene chemical recycling joint venture, Regenyx, was closing its doors at the end of April.
Regenyx started operations in 2019 in Tigard, Oregon, United States, as the first commercial-scale close-loop chemical recycling facility for PS in the world.
Agilyx described the closure of the five-year venture a “success”, saying it had successfully achieved its objectives.
However, Sustainable Plastics has uncovered details which show Regenyx has suffered millions in losses since 2021 as well as reports suggesting the partners weren’t convinced of the venture’s “success”.
Millions in losses
Agilyx’s 2022 annual report and 2023 half year results report reveal that Regenyx suffered a loss of $948,272 in 2021, $2,539,270 in 2022, and $1,095,819 until June 30, 2023. Its losses total $4,583,361.
The company’s reports show Agilyx and AmSty recognised the joint venture was fully impaired since January 1, 2021. Impairment occurs when a business asset suffers a depreciation in fair market value in excess of the book value of the asset on the company's financial statements. Those assets are considered “impaired” and must be recognised as a loss on an income statement.
“Due to the projected negative cash flows and the unique nature of the underlying plant, it was determined that the recoverable amount was zero under both the value in use and fair value less cost to sell methodology therefore the investment in Regenyx has been fully impaired since January 1, 2021,” the Agilyx reports say. “Subsequent capital investments by Agilyx led to impairments for both balance sheet periods presented, on the basis that the recoverable amount using the value in use and fair value less cost to sell methodologies would lead to a fully written off investment.”
Not-so-joint venture
The reports also reveal that Agilyx considered it did not have control or joint control of Regenyx.
“This is driven by the other 50% shareholder controlling the purchases and sales of Regenyx, via various mechanisms within the operating agreements,” the reports read. “Agilyx does have the power to participate in the financial and operating policy decisions of the investee, via its board position. Agilyx has therefore determined that it has significant influence over Regenyx and its investment is therefore measured using the equity method as an investment in associate.”
An equity method is a method of accounting by which an equity investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the net assets of the associate.
Agilyx’s records show the company is subject to a contractual obligation between April 2021 and April 2024 to purchase all of AmSty's equity investment in Regenyx at the option of AmSty, called a “put option". Investors often use put options in a risk management strategy known as a protective put, which is used as a form of investment insurance or hedge to ensure that losses in the underlying asset do not exceed a certain amount.
However, AmSty was unable to use its put option because Regenyx’s assets were fully impaired, meaning the fair market value of its shares were less than their carrying value and thus that the value of the put option was zero.
The joint venture will thus be winded down by April 30, 2024, when Agilyx’s contractual obligations end.
Continued investment provided ‘marketing value’
Regenyx’s poor efficiency was one of the causes of the joint venture’s $4.5 million in losses.
When Regenyx first launched, Agilyx and AmSty expected it to process up to 10 tons of PS waste per day (3,650 tons per year). However, Agilyx’s 2021 annual report showed the facility had processed a total of 4,400 tons between 2019 and 2021. Company records indicate that by April 2020, Agilyx had sold about 1 million pounds (less than 0.5 tons per day) of recycled styrene monomer to AmSty. In April 2021, Agilyx said the facility was undergoing operational advancements to maximise efficiency.
Agilyx ramped up its investment in Regenyx in the first half of 2023. “Investment in Regenyx increased half on half as we upgraded equipment at our Tigard plant,” its 2023 half year results report says.
The company justified its continued investment despite Regenyx’s full impairment “for the broader benefits that it brings to the group, which include servicing an important customer in AmSty, as well as, providing R&D and marketing value to demonstrate various new and current technologies being developed and implemented by the Group”.
Other ventures
Agilyx has been inventing in chemical recycling technologies for waste plastics since 2004, according to a report by Beyond Plastics. AmSty operates a polystyrene complex in St. James, Louisiana. Neither company answered Sustainable Plastics request for comment on the future of their investments in chemical recycling at the time of publication.
Regenyx was one of the 11 chemical recycling facilities built in the US scrutinised by Beyond Plastics. Commenting on the closure, Jenny Gitlitz, Beyond Plastics’ director of solutions to plastic pollution said "Agilyx calling this closure a 'success' is pure spin.”
“More than 2.2 million tons of polystyrene are landfilled or burned in the US annually, and the US polystyrene recycling rate is a paltry 0.9%,” she noted. “The Tigard venture did virtually nothing to address this large-scale plastics problem. If the venture had been technically or economically successful, the companies would be making good on their 2019 vision of developing a 50-ton-per-day facility on the West Coast. They'd also be developing the same technology to generate recycled monomer at AmSty's existing polystyrene complex in St. James, Louisiana, as they announced in April 2021. That project hasn't moved ahead either,” Gitlitz concluded.