The Management Board of fiber manufacturer Lenzing AG, with the approval of the Supervisory Board, has decided to carry out a fully guaranteed cash capital increase with subscription rights for existing shareholders in order to generate gross proceeds of around EUR 400 million.
Between June 21 and July 5, 2023, 12,068,180 new no-par value bearer shares with dividend rights from January 1, 2023 are to be offered at a subscription price of EUR 33.10 per share.
The issue proceeds are to be used to strengthen the Group’s balance sheet and liquidity position and to create additional flexibility with regard to the financing strategy and to support the strategic roadmap.
Capital increase gives Lenzing more “leeway”
“The capital increase gives us the leeway to take advantage of the gradual market recovery for Lenzing, increase efficiency and support the implementation of our corporate strategy ‘Better Growth’ in order to achieve sustainable, cash-generating, profitable growth. The fact that our core shareholder, the B&C Group, is participating fully in the capital increase is further proof that we are taking the right measures at the right time and are also sending a strong signal to the capital market,” commented Stephan Sielaff, CEO of Lenzing Group, in a statement.
“With the capital increase, we are strengthening the company’s financial position. This proactive approach gives us financial flexibility, which is the basis for strategic growth and strengthens Lenzing’s resilience. It is an important step to strengthen our balance sheet in combination with various operational measures to improve profitability and reduce leverage as we move forward,” adds Nico Reiner, Chief Financial Officer of the Lenzing Group.
The decision to launch the offering follows a comprehensive review of the company’s capital structure initiated after difficult market conditions in the second half of 2022. While Lenzing’s results in the first quarter of 2023 showed signs of recovery and Lenzing expects further significant improvements for the remainder of 2023, the Management Board believes that it is prudent to proactively maximize flexibility, strengthen the company’s financial position and improve… to support the implementation of its “Better Growth” strategy.
Lenzing had also implemented several operational measures over the course of 2022 and 2023, including a cost reduction program that is expected to generate more than 70 million annually in potential structural savings from 2023, which Lenzing says is “on track” and working capital improvement measures to further strengthen cash flow generation.
After investing around 1.8 billion euros to build up additional capacity at the plants in Thailand and Brazil, the company expects a return to a normalized investment level.
The company assumes that the additional capacities in these plants will make a significant contribution to the generation of EBITDA starting this year. Accordingly, Lenzing confirms its EBITDA guidance of EUR 320 to 420 million while improving its cash flow profile for the fiscal year ending December 31, 2023.