Shares of Cereplast Inc. jumped 18 percent on Monday after the bioplastics company announced a deal with an Indian firm that will distribute products now in the hands of European customers that haven’t paid their bills.
The El Segundo company’s plant-based resins are used to make biodegradable containers and utensils for the food service industry. The company had hoped that two big European contracts a few years ago – prior to that region’s debt crisis – would open up new markets for its products. It said that the deal with Singularis Solutions Pvt. Ltd. of Bangalore also holds potential in more economically stable parts of the world.
Under terms of the agreement, Singularis will purchase and distribute up to $8.6 million of inventory now in Europe between May 30 and Aug. 30. Singularis Solutions will issue letters of credit to Cereplast to secure the purchase. The two companies are also exploring other opportunities for business, Cereplast said.
“Our task force has succeeded in expediting the sale of the Cereplast Hybrid Resins products in its efforts to transform our outstanding accounts receivables into cash,” Chief Executive Frederic Scheer said in a statement. “The collection of outstanding monies is our highest priority but we are pleased to see that in doing so we have opened some significant opportunities that we are hopeful will bring new business to our company in the near future outside of the Euro-Zone.”
Shares closed up 9 cents, or 18 percent, to 58 cents on the Nasdaq.