Coke tight-lipped on multi-million law suit against rPET supplier Pure Tech Plastics

11-Apr-2012 - Last updated on 12-Apr-2012 at 18:23 GMT

Related tags Polyethylene terephthalate

The Coca-Cola Company has declined to comment on a case before an Atlanta court that reveals it is pursuing a claim for millions of dollar against one of its US-based recycled PET suppliers.

BeverageDaily.com can reveal that the company has filed a ‘complaint on contract’ against Illinois-based Pure Tech Plastics upon the basis of two agreements, claiming that Coca-Cola Financial is owed $3m (€2.28m) and Coca-Cola Recycling $1.989m thereunder.

Pure Tech Plastics is one of only several companies in the US that has non-objection letters from the US Food and Drug Administration (FDA) allowing it to provide post-consumer resin rPET (recycled polyethylene terephthalate) for use in direct food contact applications.

Asked why the suit was being pursued, and how legal action would affect Coke’s relationship with Pure Tech Plastics going forward, Coca-Cola Company spokeswoman Sarah Dearman told BeverageDaily.com:“Since this is a legal matter we cannot comment.”

However, BeverageDaily.com understands that the claim relates to monies loaned by Coke to holding company Re:Think Recycling Group, which allowed the latter to buy Pure Tech Plastics in November 2008.

Renewable or recyclable?

The suit comes after a joint venture rPET plant run by former Pure Tech rival United Resource Recovery closed last April, after Coca-Cola chose to restructure the JV.

The firm is still committed to sourcing 25% of PET from recycled or renewable materials by 2015, but has recently trumpeted its renewable ‘PlantBottle’ material (PET made from sugar cane ethanol) that it hopes to use for its entire virgin PET supply by 2020.

The Pure Tech Plastics action has been filed in the US District Court Northern District of Georgia Atlanta Division by the beverage giant’s lawyers Stokes Lazarus and Carmichael.

Coca-Cola Financial argues that, further to a two-year revolving credit agreement dated October 14 2008, the $3m was owed (plus interest of over $40,000 dollars as of March 20 2012).

Letters submitted to the court addressed to Pure Tech Plastics by Coca-Cola Recycling president Alain Robichaud show requests for repayment of just over $2m, but after receiving a third payment thereafter of $25,000 the beverage giant chose to take action.

Pure Tech response

Both plaintiffs are seeking judgment in their favour on the monies owed, while Coca-Cola Financial is also seeking to foreclose its security interest in collateral given by Pure Tech Plastics for the debt, granting it an immediate writ of possession thereon, and “such additional relief as is just and equitable”.

The Atlanta court filing document notes that Coca-Cola Financial and Pure Tech Plastics “agreements constitute confidential business information”.

As such, Coke requested that the court allow it to present the credit agreement and security agreement in camera (in private) or under seal with a protective confidentiality order.

A spokeswoman for Pure Tech Plastics told this publication: “We aren't able to share specifics because of ongoing negotiations.

“However, we were pleased with Coke’s initial source of capital in 2008, which enabled us to acquire Pure Tech and be one of only a very few companies to offer food grade recycled PET.”