Close the Loop Sells ISP Unit, Cuts $16M Debt and Targets FY27 EBITDA of $14–16M
Close the Loop accelerates balance sheet reset with ISP sale, debt reduction and FY27 EBITDA guidance
Close the Loop Limited (ASX: CLG) has announced a coordinated strategic reset comprising the sale of its ISP Tek Services LLC business for US$10.0 million, the retirement of approximately US$16 million in outstanding debt, the restructuring of two convertible notes, and FY27 EBITDA guidance of $14 million to $16 million. The moves collectively sharpen the company’s focus on its two remaining core divisions: Packaging and Resource Recovery.
The ISP sale consideration is structured as US$9 million payable at settlement for the shares of the business, plus a seller note of US$1 million to be paid by purchaser Ivy Technology Holdings, LLC in four equal quarterly instalments, with the first payable upon settlement. Proceeds from the transaction, combined with existing cash reserves, will be used to retire the outstanding debt.
Chairman, Grant Carman
“Management is highly confident in the future outlook of the business and believes the streamlined operating platform will enable the Company to grow from strength to strength as it executes on the significant opportunities available within its core markets.”
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Unpacking the capital structure overhaul
Convertible note resolution — two notes, two outcomes
Both convertible notes are held by Sammy and Dania Saloum. One of the note holders is a Director of the company, meaning the revised arrangements constitute a related party transaction under ASX Listing Rules and will require shareholder approval at an Extraordinary General Meeting (EGM) to be convened in due course.
The two notes carry different resolution structures, as detailed below.
| Note | Original Face Value | Key Terms | Conversion / Repayment Detail | Conversion Price |
|---|---|---|---|---|
| Note 1 | US$7.5m (matured 28 April 2026; 3-year, 4% interest) | Three-part resolution | US$4.15m converts to CLG shares; US$2.5m repaid in cash at refinancing completion; remaining principal and interest repaid over a 5-year interest-free term | 20 cents per share (reflects original listing price) |
| Note 2 | US$7.5m (3-year, 4% interest) | Full conversion | Principal plus accrued interest of US$900,000 converts to CLG shares | 37 cents per share (reflects original ISP acquisition price) |
The 37-cent conversion price for Note 2 reflects the original acquisition price associated with the ISP transaction, while the 20-cent price for Note 1 reflects the company’s original listing price.
Chairman, Grant Carman
“Their belief in the revised strategy and long-term direction of the business has been invaluable and reflects a shared conviction in the significant opportunity ahead.”
Debt refinancing — 350 to 400 basis points in savings
In conjunction with the ISP divestment, Close the Loop is in advanced discussions with potential financiers to refinance its residual debt facilities of US$19.5 million. The refinancing is expected to reduce the company’s overall interest rate by approximately 350 to 400 basis points, delivering meaningful annualised savings and improved future cashflow generation. The process is not yet finalised; further details will be provided once the new facilities are in place.
What is a circular economy company — and why does focus matter?
A circular economy business model is built around collecting, sorting, reclaiming and reusing materials that would otherwise end up in landfill. For Close the Loop, this means recovering print consumables and cosmetics, reusing toner, and repurposing post-consumer soft plastics as an additive in asphalt production. The company operates across Australia, Europe, South Africa and the United States.
For investors, portfolio focus matters in this space. Circular economy businesses with tight operational alignment tend to generate stronger margins and more predictable cashflows than diversified waste and services conglomerates. When a business is spread across unrelated service lines, cost structures become harder to manage and capital allocation decisions grow more complex.
The ISP divestment addresses this directly. By shedding a non-core IT services business, the company sharpens its investment thesis around its two genuine circular economy assets: the Packaging division and the Resource Recovery division. Both have demonstrated consistent performance and operational expertise, and both align directly with growing global demand for sustainable materials management.
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FY27 outlook — guidance, AI initiatives and the growth runway
Close the Loop has issued FY27 EBITDA guidance of $14 million to $16 million, underpinned by two divisional drivers. The Packaging division has continued to deliver strong operating cashflows and revenue growth across multiple jurisdictions and customer segments. The Resource Recovery division has been supported by recent Original Equipment Manufacturer (OEM) contract wins, with the full benefit of those contracts expected to be realised during the 2027 financial year.
Management outlined several forward-looking initiatives to support the guidance:
- Structured cost base review aligned to revenue and profitability profile
- AI-driven process improvement initiatives across the organisation
- Transition from manual execution to AI-augmented workflows
- Use of proprietary data to build customised intelligent systems
Chairman, Grant Carman
“The company will become AI-powered, shifting from manual execution to strategic, AI-augmented workflows. This will enable employees to focus on high-value strategy and creativity, while using proprietary data to build a distinct competitive advantage through customised, intelligent systems.”
Taken together, the picture entering FY27 is materially different from recent years. A simplified two-division structure, a substantially reduced debt load, a stated EBITDA guidance range, and an organisation-wide efficiency drive position Close the Loop for a meaningfully improved financial profile as the transformation progresses.
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