Finnish Rerefiner Goes Belly-up


Finnish rerefiner L&T Recoil Oy and parent company EcoStream Ltd. filed for bankruptcy at the end of March, a former company official confirmed to Lube Report, and an estate administrator is seeking buyers for assets that include a rerefinery in Hamina, Finland.

L&T Recoil Oy and its then joint venture partner EcoStream opened a 45 million (now U.S. $62.2 million) rerefinery in 2009. With 1,200 b/d of API Group II capacity, the plant was fed by used lubricants collected within the Nordic and Baltic countries and Finland.

Its not a reorganization anymore – the companys been declared bankrupt, Petri Rautanen, formerly managing director for L&T Recoil Oy, told Lube Report last week. Now an estate administrator is looking for new companies to run the rerefinery or parts of the rerefinery.

Pauliina Tenhunen, managing partner for Helsinki-based law firm Castren & Snellman Attorneys Ltd., is serving as estate administrator for the bankruptcy case. I understood when we have been speaking with the officers of the company, that they could not get any more financing for the company to continue, Tenhunen told Lube Report. That was the main reason.

Tenhunen said the goal is to find buyers for the EcoStream and L&T Recoil Oy assets soon because it costs money to keep the assets secure in the meantime. We dont have any business there now, but we have to have people watching and securing the assets, she said. So thats why were hoping the process will be quite fast. Tenhunen noted that while they are already in touch with companies that are potential buyers, if there are more potential buyers, we ask them to contact us.

In June 2012, Helsinki-based EcoStream Oy acquired waste management firm Lassila & Tikanojas 50 percent holding in L&T Recoil Oy, giving EcoStream ownership of 100 percent of the joint ventures share capital. At the same time, L&T became a shareholder in EcoStream with a 19.9 percent stake and remained one of the main raw material suppliers for the Hamina rerefinery. L&T Recoil Oy became a fully owned subsidiary of EcoStream Oy. Rautanen clarified that Lassila & Tikanoja, a publicly listed company, still exists, as EcoStream was only a small part of its business.

Marc Verfuerth, CEO of German rerefiner Avista Oil AG, said his company is among those in communications with the estate administrator about the assets in Finland. We think that this installation is interesting for us as an investment, as a facility – the technology they operate is quite interesting, Verfuerth said of the rerefinery in Hamina. Their problem remains having their facility at the wrong place in Europe – a very small, domestic market with just 17,000 tons of used oil. That is not sufficient enough to feed a 60,000 mt/y annual capacity.

The estate administrator has said they are more interested in finding somebody that will continue the operations at Hamina, Verfuerth noted. I would say that at least for Avista, a continuation of the operations is not an option under the existing circumstances, and that I cannot imagine that others would be honestly interested in operating at this location, with not enough long-term import markets close and a low-volume domestic market, he said. However, I see that involved parties could watch out for investors who want to continue the operations at Hamina.

He noted that while Avista is one of the parties looking deeply into EcoStreams assets, it is also looking into the new market opportunities in the northern part of Europe.

We at Avista Oil are in negotiations with generators and collectors of waste oil in Finland to secure our throughput for our existing rerefineries, which are mostly underutilized like many of our competitors are, Verfuerth said. If you ask me, the market in Europe is really looking for consolidation, and what happened there in Finland is part of the ongoing consolidation. And it may not be the end of such news.

Related Topics

Base Stocks    Conventional Base Stocks    Rerefined