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(Alliance News) - Synthomer PLC on Thursday said it has agreed a relaxation of loan covenants to provide the Essex-based chemicals maker with "increased headroom" through to the end of next year.
Synthomer said bank debt covenants have been increased to 4 times earnings before interest, tax, depreciation and amortisation for this coming December from 3.5 times. The covenants will increase to 4.75 times from 3.25 times for June 2023 and revert to 4 times from 3.25 times for December.
For 2021, the company reported Ebitda of GBP522.2 million, while Ebitda for the first half of 2022 was GBP173.1 million. As of June 30 this year, net debt stood at GBP992.8 million and leverage was 2.3 times Ebitda.
Synthomer noted that its priority is to return leverage to within its target range of 1-to-2 times.
Last week, the company said it would suspend all dividend payments until the end of 2023, including the one that is due in November.
Further, at Synthomer's recent investor event earlier this month, the company set out plans to generate savings of between GBP150 million and GBP200 million in 2023, excluding divestments. It said that this would be achieved from reductions to working capital, capex, operating costs and from the suspension of dividend payments.
On Thursday, Synthomer also confirmed that it has "significantly improved" its financing structure having signed a five-year, GBP450 million facility with UK Export Finance on terms that are similar to the company's existing revolving credit facility.
Shares in Synthomer were up 6.0% to 99.20 pence each in London on Thursday morning.
By Sophie Rose; sophierose@alliancenews.com
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