Swedish textile recycler Renewell has plugged a looming liquidity crunch with nearly $10 million in short-term funding from investors and lenders, the company said Wednesday.
The money is expected to provide the company runway for the coming months, but it still needs to secure longer-term funding in the new year, it said.
Renewcell has been under pressure since October, when a weaker-than-expected sales update sent its share price plunging and prompted the abrupt departure of its CEO. It launched a strategic review to explore fresh funding options last month after failing to lock in more orders for its signature material.
H&M, its biggest shareholder, is among the companies providing near-term support. The fashion giant has stepped in with a short-term loan of $4.4 million and is negotiating an agreement to source thousands of tonnes of material containing Renewcell’s recycled cellulose pulp over the next two years. The company’s existing lenders and second-largest shareholder, investment firm Girincubator, have also provided funds.
The Swedish recycling company’s ability to navigate its current challenges is being closely watched as a test case for businesses hoping to bring material innovations to the market at scale. While brands have said they want access to more sustainable materials and even invested in the space, demand has often been weaker than hoped.
Renewcell said it is continuing to explore options for fresh long-term funding, which could include an equity injection through a rights issue or by targeting a strategic investor.
Learn more:
What’s Blocking the Rise of More Sustainable Materials?
Weaker-than-expected demand for Swedish textile recycler Renewcell’s first commercial volumes of recycled cellulose pulp has sent the company’s stock price plummeting and highlighted broader hurdles challenging efforts to lessen fashion’s environmental footprint.
