North America’s Largest Glass Recycler Files for Chapter 11 BankruptcyDecember 11th, 2023 by Joshua Huff
A major recycler of windows and heavy laminated glass has filed for bankruptcy. Strategic Materials Inc. (SMI), North America’s largest glass recycler, filed for Chapter 11 protection last Monday in the U.S. Bankruptcy Court for the Southern District of Texas. SMI claimed around $432 million in debt liabilities.
According to court filings, SMI’s $432 million in funded debt consists of $406 million in outstanding principal and letters of credit and $26 million in accrued and unpaid interest.
SMI has 43 locations in the U.S. and recycles more than two million tons of glass annually, serving end markets that include the flat glass and specialty glass industries, among others. It employs more than 700 full- and part-time workers and uses around 200 temporary workers.
SMI writes in the court documents that several events led to the bankruptcy filing, including macroeconomic headwinds, increased interest rates and inflation, and rising competition in its most profitable regions. The company has also been impacted by the changing landscape in the glass recycling market, such as stricter requirements for cullet specifications.
“The past several years presented significant operational and financial challenges, requiring a comprehensive restructuring of the company’s balance sheet,” says CEO Chris Dods. “We are grateful for the demonstration of confidence in our underlying business, represented by substantial new financing committed from the lender group.”
According to court filings, SMI has secured new money commitments of $23 million, subject to court approval, for a debtor-in-possession (DIP) financing facility from existing lenders to support its business operations. The funding will also help SMI financially restructure and reorganize, including deleveraging the balance sheet by more than $300 million.
Officials explain that restructuring will enable SMI to grow and operate sustainably while maximizing stakeholder value. Court filings indicate that SMI aims to complete the restructuring within 40 days.
To stave off bankruptcy, SMI hired Moelis & Co. to explore an out-of-court sale in March 2022. The investment bank initiated a formal marketing effort in September 2023 that led more than 40 prospective buyers to sign non-disclosure agreements, but ultimately, none submitted a satisfactory bid.
The judge set Jan. 10, 2024, as the date for a final hearing on the DIP financing and the approval of the Chapter 11 plan.