Analyst Comment

Spinnova: Altor acquires the assets of the Swedish recycled pulp manufacturer Renewcell’s bankruptcy estate

Translation: Original comment published in Finnish on 06/05/2024 at 7:31 am EEST

Altor establishes a new company that will continue to commercialize the pulp

The bankruptcy estate of Renewcell, a company focused on the production of Swedish recycled textile pulp, announced yesterday that the Swedish venture capital fund Altor will acquire the assets of Renewcell’s bankruptcy estate (including, e.g., a textile pulp factory in Ortviken, Sweden, and Renewcell’s IPR). Renewcell went bankrupt in Q1 this year when problems related to the sale and product quality of the pulp manufactured from recycled garments caused the company to run into a cash crisis. Based on the acquired assets, Altor will establish a new company called Circulose, which continues from a clean slate to commercialize the pulp produced from recycled garments with patented technology that will help reduce the environmental load of the clothing industry.

Recycled pulp manufacturers could be Spinnova's customers

We expected an operator to acquire Renewcell’s assets and continue commercializing the product manufactured with its technology. Thus, the news was not surprising at all. Considering Altor’s muscles, we feel Circulose is backed by a long-term owner with good investment ability.

Renewcell and Spinnova also kindled a cooperation before Renewcell went bankrupt. We believe recycled textile-based pulp manufacturers are a potential customer group for Spinnova, as we feel processing recycled pulp with Spinnova's technology could help improve the quality and environmental performance of recycled textile-based fibers. Therefore, we feel that Renewcell's assets ending up in the hands of a credible player like Altor that is probably also interested in partnering is at least neutral or slightly positive news for Spinnova, although we have no information on Altor's specific plans regarding the business as of yet. Competitively, we do not believe that Circulose will pose any challenges to Spinnova, although Circulose and Spinnova’s technology customers could in principle start offering their products for the same end-use applications at some point.

The comprehensive report on Spinnova published last week is freely available here.

Spinnova operates in the textile industry. The company has developed a production technology for textile fibers, known as SPINNOVA® fiber, which is manufactured using a mechanical production process. In addition to its main business, research and development is conducted in the area, and the company offers service and related peripheral services. The company operates on a global level with headquarters in Jyväskylä.

Key Estimate Figures2024-05-30

	2023	24e	25e
Revenue	10.6	2.2	8.4
growth-%	-56.2 %	-79.3 %	282.7 %
EBIT (adj.)	-20.9	-15.5	-12.3
EBIT-% (adj.)	-196.7 %	-703.6 %	-146.1 %
EPS (adj.)	-0.38	-0.28	-0.23
Dividend	0.00	0.00	0.00
Dividend %
P/E (adj.)	neg.	neg.	neg.
EV/EBITDA	neg.	0.9	neg.