Loop Industries Cuts First India Plant by 36% to 45,000 Tonnes as Cash Falls to $1.9 Million and Financing Remains Unsecured
Fiscal Q2 2027 earnings call, October 16, 2026: smaller facility lowers the funding bar, but liquidity is thin and no capital is committed
Rescoped India plant is the central new fact
Loop Industries and its 50-50 joint venture partner Ester Industries have cut the planned capacity of the first Indian facility to 45,000 tonnes per year from 70,000 tonnes. The transcript renders the units as "kilotonnes," but the context makes clear the figures are tonnes. Founder and CEO Daniel Solomita said the change "will significantly lower the capital cost of the facility and the resulting debt and equity financing needs." Toyo Engineering is finishing detailed work on a new cost estimate. Management expects it "in the coming weeks" and confirmed it would arrive before calendar year-end. No revised project cost was given.
The resizing also shortens the schedule. Management described a total of 20 months for construction, start-up and commissioning. If funding is secured, construction would begin in the first quarter of calendar 2027, with commercial production by the end of 2028. That timeline depends entirely on closing financing in the next few months, and management declined to predict the size, form or timing of the raise.
The equity math is better, but the numbers are not yet clean
Equity was the most contested topic on the call, and the discussion showed how unsettled the figures are. CFO Spencer Hart said lenders are expected to finance about 70% of the project, with the remaining 30% split evenly between Loop and Ester. Loop's share is therefore about 15% of total project cost. On the original $165 million to $170 million budget for the 70,000-tonne plant, he said that implies $25 million to $30 million, "a little more" than the roughly $20 million figure analysts had been carrying.
Applying a roughly 42% reduction, a figure raised by Divyde Capital's Varyk Kutnick, would put Loop's contribution near $15 million to $16 million. Hart agreed that is "basically how the math works," while cautioning that costs will not fall in direct proportion to capacity. Loop has already contributed $3 million to $5 million to the joint venture, which Hart said would likely be at the low end of that range. Hart agreed with Kutnick's suggestion that Loop needs to fund roughly $17 million to $18 million to get the project over the line. That figure does not reconcile cleanly with the $15 million to $16 million total less prior contributions, and the true number depends on the Toyo estimate. Investors should treat the range as provisional.
Liquidity is the binding constraint
Total available liquidity was $1.9 million at August 31. Cash operating expenses were $1.6 million in the quarter, down $800,000 from a year earlier. Hart said the run rate declined further in the third quarter, helped by cuts in personnel, insurance and other costs, along with outside directors waiving cash compensation. Against that spending, the cash balance covers little more than a quarter of operations before any further cuts. The company cannot realistically get through the pre-construction period without new capital. It also means a larger share of any raise may go to corporate survival rather than to the joint venture.
The board formed a special committee in September 2026, which is working with advisers on "a full range of financing alternatives, including equity, debt and nondilutive options." Hart said it is "highly likely that there'll be an equity component," either straight equity or a convertible instrument. He described this as "the hardest financing that we'll ever have to do." Solomita acknowledged the "current low stock price," which suggests any equity raise will be priced unfavorably for existing holders. Management said it has fielded "a lot of interest from investors" but offered no commitments.
Debt and commercial support appear intact
On project debt, management reported progress with a major Indian bank that has a long relationship with Ester. The bank's team visited Loop's Montreal facility a few weeks ago and started the technical and economic due diligence (the TEV study). Loop said the technology assessment portion was completed successfully and will be used as documentation for the loan. Solomita said lenders viewed the downsizing as "only a positive" and that it was "extremely well received." This claim comes from management, and no loan terms or approvals were disclosed.
Demand support looks adequate for the smaller plant. Solomita said signed contracts, including with Nike and Taro Plast, together with LOIs and other commitments, put the facility "over a threshold of 50%" sold on the 45,000 tonnes. Management did not provide exact volumes or say how much is covered by binding contracts rather than non-binding LOIs. That distinction matters to lenders.
Why a smaller plant may not hurt returns, and what happens to plant two
Responding to a question from Paradigm Capital's Marvin Wolff, Solomita argued that the smaller scale should not materially erode profitability. He explained that chemistry costs scale linearly: "The amount of catalysts you use or the amount of energy you use is kind of directly proportional to the amount of feedstock you're processing." The penalty comes from fixed costs, particularly labor, which does not shrink with capacity. In his words, "usually it's the labor cost that bites you, because you'll need the same amount of people running the facility. But in our case, because of the low-cost nature of India, it doesn't impact our financials dramatically." Management did not provide unit economics or return figures to support this.
The second facility on the same site remains planned and could grow. Solomita said feedstock availability is the gating factor and that management is comfortable there is enough in the area for "at least 170,000 tonnes." That would allow the second plant to reach 125,000 tonnes, keeping combined capacity at the original 170,000 tonnes. The second plant would follow only after a successful start-up of the first, so the combined capacity depends on first-plant execution and funding.
Management also reiterated that its European partner remains committed. No update was offered on the European project, and the call centered on India.
ROTH Capital's Gerry Sweeney said he remains of the view that the technology works and that the challenge is "getting financing across the goal line." The call did little to change that view, since the smaller plant lowers the size of the required raise without resolving whether the company can secure it. The Toyo cost estimate and any financing announcement from the special committee are the next catalysts.