By Dieter Holger

 

Loop Industries Inc. has denied accusations from shortseller Hindenburg Research of lying about its recyclable plastic technology, but it declined to specifically address a raft of other allegations about unproductive partnerships and the hiring of a convict by its chief executive.

Hindenburg--which holds a short position in Loop and said its report is based on photos, internal documents and interviews with former employees--said Tuesday that Loop's scientists were encouraged to lie about the technology and that other employees were unable to independently reproduce breakthroughs made in a separate lab.

The firm also accused Loop CEO Daniel Solomita of hiring a convict, who had previously pled guilty to stock manipulation, to help raise money for the company. Additionally, Hindenburg suggested that Loop's partnerships with Danone SA, Coca-Cola Co., PepsiCo Inc. and chemical company Indorama Ventures PCL haven't resulted in any plastic being produced.

"We expect Loop will never generate any meaningful revenue," Hindenburg said, adding that it has submitted its findings to regulators.

Terrebonne, Canada-based Loop said Tuesday that Hindenburg's claims were either unfounded, incorrect or that allegations about its so-called "infinitely recyclable" polyethylene terephthalate plastic, commonly known as PET, were "based on the first iteration of Loop's technology, known as Gen 1, which was in use between 2014 and 2017."

"In 2017, Loop reinvented its process and developed its Gen 2 technology, which is at the core of Loop's commercialization projects," the company said.

A Loop spokeswoman on Wednesday declined to comment directly on the other accusations in the report.

In September, Loop penned a deal with French waste manager Suez SA to build a factory in a yet-to-be announced location in Europe. The companies said they would decide the factory's location in mid-2021.

When asked for comment on whether it had conducted due diligence on Loop's technology, a Suez spokeswoman on Wednesday pointed to Loop's Tuesday statement, which had no mention of the factory deal.

Shares in Loop have traded down more than 30% following the accusations.

 

Write to Dieter Holger at dieter.holger@wsj.com; @dieterholger

 

(END) Dow Jones Newswires

October 14, 2020 09:52 ET (13:52 GMT)

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