Loop Industries (NASDAQ:LOOP) said it is advancing financing, customer commitments and engineering work for its planned Infinite Loop projects in India and Europe, with management emphasizing progress on project debt and future cash flow sources during the company’s first-quarter fiscal 2027 corporate update call Wednesday.
Founder and Chief Executive Officer Daniel Solomita said the company continues to make “meaningful progress” on its Infinite Loop India project with joint venture partner Ester Industries. The joint venture previously hired KPMG to arrange project debt, and Solomita said that process is “going extremely well,” with additional term sheets received from new lenders.
India project financing moves into due diligence
In response to a question from Roth Capital’s Jerry Sweeney, Solomita said the term sheets received from international and Indian lenders have “harmonized” around a 70% debt and 30% equity structure. Loop and Ester would each be responsible for 15% of the equity contribution, he said. Solomita said the expected debt terms are approximately SOFR plus 3%.
The remaining steps include technical due diligence, final negotiations on terms and closing of the debt, Solomita said. He said the expected timing is in the fall of 2026, aligned with the project breaking ground.
Solomita pointed to prior technical diligence performed by Société Générale and SK Geo Centric, as well as commercial products made with Loop material, as reasons for confidence in the process. He cited examples including shoes with On and evian water bottles.
Management also said the joint venture recently applied for subsidies from the state of Gujarat, which announced support for clean technology projects. Solomita said the India project would be eligible for about CAD 28 million to be returned to the joint venture over an eight-year period, which he said would further improve the project’s financial returns.
Customer commitments include new 15,000-ton LOI
Loop said it signed a letter of intent for 15,000 tons at a fixed price with a leading textile apparel brand company. Solomita said the customer generally does not sign forward contracts and typically buys on a spot basis or under shorter contracts, but agreed to sign the LOI to support the project and show its intent to buy material.
Solomita said the customer’s total appetite is 90,000 tons per year over time, and he described it as a potentially meaningful long-term buyer for the India project. He said the customer has also indicated it would speak with lenders if needed to explain its position and the reason it signed an LOI rather than a full offtake agreement.
During the question-and-answer session, Solomita said the LOI is not expected to convert into a traditional long-term contract before the plant opens. Instead, he said it is expected to translate into spot market purchases once the plant is operational.
“The LOI gives comfort to the debt lenders that the appetite is there,” Solomita said.
Solomita said Loop is in negotiations with several leading brands in textiles and consumer packaging. If the company completes the contracts now under negotiation, he said, Loop expects to have the required volume secured through contracts or LOIs to begin construction. He also said many contracts include options for customers to buy additional volumes.
Asked by Paradigm’s Marvin Wolff how much of the 70,000-ton India plant capacity could be covered, Solomita said that if current negotiations are completed, “we would have most of the facility locked in either full contracts and LOIs.”
European licensing project to begin engineering phase
Solomita also provided updates on the company’s European licensing project with Société Générale. He said Société Générale has selected a site in Schwarzheide, Germany, owned by BASF, for the first Infinite Loop Europe project.
Loop is in final negotiations for the first phase of an engineering contract, scheduled to begin in September 2026. Solomita said Loop’s engineering team will deliver a pre-FEED engineering package for a 70,000-ton Infinite Loop plant using modular construction.
He described modular construction as “the roadmap for the future” for bringing lower-cost manufacturing to other regions, saying the company intends to apply lessons from the India project by building plant modules in India and shipping them to sites in different parts of the world.
Solomita said the initial engineering contract and a follow-on engineering phase expected in mid-2027 should provide enough cash flow to fund Loop’s back office expenses “for the foreseeable future.” He also said an additional EUR 10 million licensing payment would be due to Loop from Société Générale around the end of 2027 when the next milestone is reached.
In response to a question from Global Value Investment Corp.’s J.P. Geygan, Solomita said the European project is a licensing agreement and Loop is not currently expecting to invest capital for equity in the project. He described three potential revenue streams: licensing revenue, engineering packages and economic benefits from selling modularized structures.
Cash overhead reduced to about CAD 500,000 per month
Chief Financial Officer Spencer Hart said Loop has continued to lower cash overhead, which is now running at approximately CAD 500,000 per month. He said savings have come partly from lower employee compensation and reduced insurance costs.
Hart also said the company has benefited from funding from the National Research Council of Canada, totaling approximately CAD 2.9 million in aggregate, with monthly funding beginning earlier in 2026.
As of May 31, Loop had approximately CAD 3.6 million of liquidity, including its credit facility, Hart said. Solomita said Loop is evaluating ways to finance its equity requirement for the India joint venture and is prioritizing non-dilutive capital, including a potential structured debt facility rather than a dilutive equity issuance.
Solomita said existing liquidity, expected engineering contract cash flow and future licensing payments are intended to support operating expenses, while the company continues work on funding its remaining India joint venture equity requirement.
“We continue to make meaningful progress in all projects, the project in Europe and the project in India,” Solomita said in closing. “We’re very optimistic and looking forward to getting this project built.”
About Loop Industries (NASDAQ:LOOP)
Loop Industries (NASDAQ:LOOP) is a technology innovator in the sustainable plastics sector. The company has developed a proprietary depolymerization process that breaks down end-of-life polyethylene terephthalate (PET) plastic and polyester fiber into their base molecules. These purified monomers are then repolymerized into virgin-quality PET resin suitable for new packaging applications, creating a closed-loop recycling solution that addresses global plastic waste challenges.
With its headquarters in Terrebonne, Quebec, Loop Industries operates pilot and demonstration facilities to validate and refine its technology.
