(Adds details on risks, background)
Oct 10 (Reuters) - UK-based polymer products maker Low &
Bonar on Thursday warned of tough trading conditions in
the third quarter and said that it would not be able to comply
with its financial agreements if they were tested in May.
Low & Bonar said it had talked with its lenders as a result
of trading challenges, deterioration in outlook and lesser
flexibility in managing supplier credit terms.
Changes to financial agreements were completed and financial
deals, which were due to be tested at the end of November, were
waived to help the company move ahead with its turnaround plan
and takeover by FV Beteiligungs-GmbH.
The company, which sources polymers and makes them into
yarns, fibres and coated fabrics used in roofing, building and
also automobiles, has been working to simplify its portfolio and
structure while working to improve operational performance.
If the takeover offer from FV Beteiligungs-GmbH were to
lapse before or after Nov. 30, the agreements would be
reinstated and tested, Low & Bonar said, adding that there is a
significant risk that should the financial covenants be tested,
the company would not be able to comply.
Philip de Klerk left the company as chief executive in May
as it issued a second profit warning in two months. De Klerk's
departure was the latest upheaval for the company, which has
been in the red for the past two years after being hit by a
range of problems, including more recently the U.S.-China trade
dispute.
Low & Bonar said the trade wars had hurt Chinese customers
of its unit that makes synthetic non-woven fabrics, with year to
date Asia Pacific sales behind a year earlier.
The company, founded as a small textile company in 1903, has
also warned of softness in the European automotive market.
FV Beteiligungs-GmbH, a unit of German technology group
Freudenberg SE, offered to buy Low & Bonar in September, valuing
the company at about 107.0 million pounds ($130.89 million).
($1 = 0.8175 pounds)
(Reporting by Samantha Machado and Noor Zainab Hussain in
Bengaluru, Editing by Sherry Jacob-Phillips, Bernard Orr)
