Lenzing launches approx. EUR 400 million fully underwritten capital increase with subscription rights

• Cash capital increase with subscription rights of approximately EUR 400 million gross proceeds
• The offer is subject to the approval and publication of the prospectus for the Offering by the Austrian Financial Market Authority which is expected for today
• The subscription price has been set at EUR 33.10 per share
• Per 11 Shares held, each shareholder can subscribe to 5 new shares.
• The indirect majority shareholder of Lenzing, B&C Group, has committed to subscribe for all of its subscription rights
• The subscription period is expected to commence on 21 June 2023 (inclusive) and to end on 5 July 2023 (inclusive)
• The subscription rights are expected to trade from 21 June 2023 (inclusive) until 29 June 2023 on the Official Market of the Vienna Stock Exchange
• International private placement of any unsubscribed new shares is expected to take place on 5 July 2023
• Lenzing plans to use the proceeds to strengthen its financial position and support the execution of its “Better Growth” corporate strategy 

Lenzing – The management board of Lenzing Aktiengesellschaft (“Lenzing” or the “Company”), with the approval of the supervisory board, has decided to launch a fully underwritten capital increase against contribution in cash with subscription rights for existing shareholders to raise gross proceeds of approximately EUR 400 million (the “Offering”). The proceeds of the Offering will be used to strengthen the Company’s balance sheet and liquidity position and provide additional flexibility with respect to the Company’s financing strategy, as well as support its strategic roadmap.

“The capital increase gives us the leeway to take advantage of the gradual recovery of the market for Lenzing, increase efficiencies and support the execution of our corporate strategy ‘Better Growth’ to drive sustainable, cash generating, profitable growth. The fact that our core shareholder, B&C Group, is fully participating in the capital increase is further proof that we are taking the right action at the right time and also sends a strong signal to the capital market”, states Stephan Sielaff, Chief Executive Officer of Lenzing Group.

“We are strengthening the Company’s financial position with the capital increase. This proactive approach provides us with financial flexibility, which is the basis for strategic growth and strengthens Lenzing’s resilience. It is a major step towards strengthening our balance sheet in combination with several operational measures to enhance profitability and to reduce leverage going forward”, Nico Reiner, Chief Financial Officer of Lenzing Group, adds.

Background to the Offering

The decision to launch the Offering comes after a comprehensive review of Lenzing’s capital structure initiated following the challenging market conditions in the second half of 2022. While the Company’s results for the first quarter of 2023 have shown signs of recovery and Lenzing expects significant further improvements during the remainder of 2023, the management board believes it is prudent to proactively maximize flexibility, strengthen the financial position of the Company and support the execution of the Company’s “Better Growth” strategy.

In addition, the Company has implemented several operational measures during the course of 2022 and 2023 including:

• A cost reduction programme that is well on track to deliver more than EUR 70 million of potential structural savings p.a. as of 2023 and working capital improvement measures to further strengthen cash flow generation; and
• Following capital expenditures of approximately EUR 1.8 billion (2020A-2022A) related to building additional capacity at plants in Thailand and Brazil, the Company is expecting to return to normalised Capex levels. The additional capacity at these plants is expected to contribute significantly to Lenzing’s EBITDA generation, starting in 2023.

Accordingly, Lenzing reconfirms its EBITDA guidance range of EUR 320 to EUR 420 million while also improving its cash flow profile for the financial year ending 31 December 2023.

In order to proactively manage and further optimise its debt maturity profile, Lenzing has reached a non-binding agreement in principle with certain lenders to extend the maturity of certain of its loans by two years, so that EUR 249 million of principle and interest currently payable between December 2023 and June 2025 will be due at specified later dates. The extensions are subject to the negotiation and execution of final documentation by the respective lenders and the Group. Over the long term, the Company is targeting a net leverage ratio (net financial debt / EBITDA) of <2.5x.

Main Terms of the Offering

The Offering will result in the issuance of 12,068,180 new no-par value bearer shares with an entitlement to dividends as of 1 January 2023 (the “New Shares”) at a subscription price of EUR 33.10 per New Share (the “Subscription Price”), representing a 35.9% discount to the TERP (theoretical ex-rights price) based on the closing price of Lenzing’s shares on 15 June 2023. The gross proceeds of the Offering will amount to approximately EUR 400 million.

Each shareholder of Lenzing will receive one subscription right for each Lenzing share held as of 11:59 p.m. Central European Summer Time on 16 June 2023. The subscription ratio is 11 to 5, so that shareholders (or holders of subscription rights) are entitled to subscribe for 5 New Shares of Lenzing for every 11 existing shares (or for the equivalent number of subscription rights). There will be no compensation for subscription rights not exercised; however, the subscription rights are transferable and can be traded on the Official Market of the Vienna Stock Exchange during the trading period indicated below. One existing shareholder has waived its right to four subscription rights in order to provide for an even Subscription Ratio.

Any New Shares not subscribed for by existing shareholders or holders of subscription rights will be offered for sale to selected institutional and other qualified investors pursuant to applicable private placement exemptions, with the offer price in such private placement being at least equal to the Subscription Price.

Underwriting of the Offering

The Offering will be fully underwritten, subject to certain conditions, by a syndicate of banks consisting of J.P. Morgan SE, Morgan Stanley Europe SE, BNP PARIBAS and UniCredit Bank AG as Joint Global Coordinators and Joint Bookrunners, Erste Group Bank AG as Joint Bookrunner, and COMME