Synthomer to raise €520m to refinance borrowings

Synthomer announced its intention to raise €520m (£465m) of debt to refinance its borrowings as the chemicals company reported sales down by a fifth in April and May.

The FTSE 250 company said it would issue unsecured senior notes due in 2025 to refinance a €520m bridge facility put in place in 2019 to fund its acquisition of Onmnova Solutions. Integration of the purchase is going as expected and is on track for $29.6m (£23m) of synergies, Synthomer said.

After a solid start to 2020, volumes were reduced in April and May by Covid-19 as sales to automotive, oil and gas, coatings and other industrial markets fell. Overall volumes were about 20% lower than a strong period a year earlier though business picked up towards the end of May, Synthomer said. The update includes results for Omnova, which became part of Synthomer on 1 April.

"Following the issuance of the notes, Synthomer expects to have a long-term and sustainable financing structure," the company said. "The new financing structure will give Synthomer flexibility to be able to respond to the current challenging macroeconomic environment and in due course be able to take advantage of future growth opportunities."

The company's shares rose 4.7% to 286.40p at 11:58 BST.

Synthomer said its balance sheet was strong with leverage covenant headroom of 4.25 times earnings for 2020 and 4 times for 2021. The company said it had significant liquidity underpinned by a five-year €460m revolving credit facility and $260m of term loan bank facilities.