Loop Industries (NASDAQ:LOOP) said it has reduced the planned capacity of its first commercial recycling facility in India to 45,000 metric tons annually from 70,000 metric tons, a move intended to lower capital requirements, reduce financing needs and accelerate the expected construction timeline.
Founder and Chief Executive Officer Daniel Solomita said the company’s joint venture with Ester Industries made the decision to scale down the first plant while retaining plans for a second, larger facility at the same site. Toyo Engineering is completing detailed work on a revised project-cost estimate, which Solomita said is expected in the coming weeks.
Loop did not provide a final revised capital-cost figure. However, management said the smaller project would require less debt and equity financing than the original plan. If funding is secured, the company expects construction to begin in the first quarter of calendar 2027, with commercial production targeted by the end of 2028.
India project financing remains the key step
The company said it is in discussions with a major Indian bank that has a longstanding relationship with Ester Industries regarding project debt financing. According to Solomita, the lender has begun technical due diligence and sent a team to Loop’s Montreal facility to assess the company’s technology.
“We successfully completed the technology assessment of the TDD study,” Solomita said, referring to the technical due-diligence process. He said the documentation would support the lender’s assessment of the debt portion of the India project.
Chief Financial Officer Spencer Hart said the company’s board formed a special committee in September 2026 to evaluate financing alternatives for Loop’s share of the equity contribution to the joint venture. The committee is working with advisers and considering equity, debt and non-dilutive financing options, Hart said.
Hart said Loop is flexible about the form of capital it raises, including straight equity or convertible instruments. He declined to give a precise timeline or amount for a financing transaction, saying the company would need financing in place before it could begin construction in early 2027.
Management said the planned downsizing was viewed positively by prospective debt lenders because it would reduce the amount of required borrowing. Solomita said Loop has signed contracts with Nike and Taro Plast, along with letters of intent from other parties, and expects those commitments to satisfy lender requirements.
More than half of initial capacity committed, management says
In response to an analyst question, Solomita said more than 50% of the planned 45,000-metric-ton annual output has been committed through signed contracts or letters of intent. The company did not disclose the specific volume associated with each agreement.
Loop continues to envision a second facility at the India site after the initial plant is successfully started up. Solomita said the company believes there is sufficient feedstock in the area to support at least 170,000 metric tons of combined capacity. Under that scenario, the second facility could potentially be expanded to 125,000 metric tons, while the combined output of the two plants would remain at roughly 170,000 metric tons.
Solomita said the smaller first plant is still expected to offer attractive economics because of Loop’s low-temperature, no-added-pressure technology and the lower-cost operating environment in India. He said the facility is intended to produce virgin-quality PET resin and polyester fiber using available textile waste feedstock.
During the call, Hart outlined how management is considering Loop’s potential equity obligation. He said lenders have discussed financing approximately 70% of the project, leaving 30% to be funded through equity and split evenly by Loop and Ester Industries. That would make Loop’s contribution roughly 15% of the project’s overall cost, though Hart emphasized that neither the final project cost nor financing terms have been finalized.
Hart said the prior 70,000-metric-ton project had been discussed at approximately $165 million to $170 million, which would have implied a Loop equity contribution in the range of $25 million to $30 million under that framework. He said the revised amount will decline, but may not fall in direct proportion to the reduction in planned capacity because certain costs are fixed. Loop has already contributed an amount in the $3 million to $5 million range to the joint venture, he added.
Cost reductions and liquidity
Loop reported cash operating expenses of $1.6 million for the quarter, down $800,000 from the prior-year period. Hart attributed the reduction to lower personnel, insurance and other operating costs, as well as outside directors’ waivers of cash compensation.
The company reported total available liquidity of $1.9 million as of Aug. 31. Hart said its operating-expense run rate continued to decline in the third quarter.
Solomita acknowledged the company’s low stock price and the need to secure capital for the India facility, but said management, the board and strategic partners remain focused on the long-term commercialization of Loop’s technology in India and Europe.
About Loop Industries (NASDAQ:LOOP)
Loop Industries, Inc (NASDAQ:LOOP) is a technology company focused on the sustainable recycling of polyethylene terephthalate (PET) plastic and polyester fiber. Its proprietary technology is designed to break down PET waste, including materials that are difficult to recycle through conventional mechanical processes, into its basic chemical components.
The company’s process uses depolymerization to convert PET waste into dimethyl terephthalate (DMT) and monoethylene glycol (MEG). These materials can be used to produce new PET plastic and polyester products that are intended to have quality comparable to those made from virgin materials.
