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

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 COMMERZBANK Aktiengesellschaft and Raiffeisen Bank International AG as Co-Lead Managers (the “Managers”).

Subscription Commitment

B&C Group, which indirectly holds 52.25% of Lenzing’s share capital, has committed to subscribe pro-rata to their shareholding for 6,305,315 New Shares in the Offering at the Subscription Price (equivalent to approximately EUR 209 million).

Indicative Timetable of the Offering

Subject to the publication of the prospectus as approved by the Austrian Financial Market Authority (FMA), the New Shares will be offered to existing shareholders by way of an indirect subscription right (mittelbares Bezugsrecht) in accordance with section 153 para 6 of the Austrian Stock Corporation Act with Erste Bank Group AG, on behalf of the Managers, acting as subscription agent during the subscription period, which is expected to run from Wednesday, 21 June 2023 (inclusive) until 5 July 2023 (inclusive). Subscription rights will be traded on the Official Market of the Vienna Stock Exchange under ISIN AT0000A35PJ0 from 21 June 2023 (inclusive) up to 29 June 2023 (inclusive). The existing Lenzing shares will be traded “ex subscription rights” from 19 June 2023 onwards.

Settlement and delivery and trading in the Prime Market segment of the Vienna Stock Exchange of the New Shares under the existing ISIN AT0000644505 is expected to commence on 10 July 2023, conditional upon the registration of the capital increase with the companies register. The right to terminate the offer is reserved.

Lock-up Agreements

Following the Offering, the Company as well as Lenzing’s majority shareholder, B&C KB Holding GmbH and B&C Ares Holding GmbH, will be subject to a 6-month lock-up, subject to certain exceptions.

Important Notice

These materials are not for distribution or release, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Australia, Canada, Japan or any other jurisdiction in which such distribution or release would be unlawful. These materials do not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States, Australia, Canada or Japan, or any other jurisdiction in which such offer or solicitation may be unlawful. The securities mentioned herein have not been, and will not be, registered under the US Securities Act of 1933, as amended (the “Securities Act”). The securities may not be offered or sold in the United States, absent registration or an exemption from the registration requirements of the Securities Act. There will be no public offer of the securities in the United States.

This communication is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). The securities described herein are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

In the member states of the European Economic Area other than Austria, this release is only addressed to and directed at persons who are “qualified investors” within the meaning of Article 2(e) of Regulation (EU) 2017/1129 of the European Parliament and of the Council of June 14, 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (the “Prospectus Regulation”).

This release does not constitute an offer of securities for sale or a solicitation of an offer to purchase securities. A public offer of securities of the Company in Austria will be made solely on the basis of a securities prospectus to be approved by the Austrian Financial Market Authority (“FMA”) in Austria, which approval should not be understood as an endorsement of any Securities offered. Neither this announcement, nor anything contained herein, shall form the basis of or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction. A decision on the acquisition regarding the securities of the Company should only be made on the basis of the approved securities prospectus. The securities prospectus will be published promptly upon approval by the FMA expected on 16 June 2023 and will be available in electronic form on the Company’s website (https://www.lenzing.com/capital-increase-2023). A printed copy is available upon request at the seat of the Company at Werkstraße 2, 4860 Lenzing, Austria during normal business hours.

Stabilisation / EU Regulation 2014/596 / EU Regulation 2016/1052 / Austrian law.

This announcement does not constitute an offer to purchase securities or solicitation of an offer to purchase securities in any jurisdiction.

Information in Announcement

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed by any person for any purpose on the information contained in this announcement or its accuracy, fairness or completeness.

The information in this announcement is subject to change. Before making an investment decision with respect to any securities to which this announcement relates, persons viewing this announcement should ensure that they fully understand and accept the risks which will be set out in the securities prospectus, if published. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness.

This announcement does not constitute a recommendation concerning a possible offer. The value of shares can decrease as well as increase. Potential investors should consult a professional advisor as to the suitability of a possible offer for the person concerned. Nothing contained herein constitutes or should be construed as investment, tax, financial, accounting or legal advice.

Certain data in this announcement, including financial, statistical, and operating information has been rounded. As a result of the rounding, the totals of data presented in this announcement may vary slightly from the actual arithmetic totals of such data. Percentages in tables may have been rounded and accordingly may not add up to 100%.

Forward-Looking Statements

Certain statements contained in this release may constitute “forward-looking statements” that involve a number of risks and uncertainties. Forward-looking statements are generally identifiable by the use of the words “may”, “will”, “should”, “plan”, “expect”, “anticipate”, “estimate”, “believe”, “intend”, “project”, “goal” or “target” or the negative of these words or other variations on these words or comparable terminology. Forward-looking statements are based on assumptions, forecasts, estimates, projections, opinions or plans that are inherently subject to significant risks, as well as uncertainties and contingencies that are subject to change. No representation is made or will be made by the Company that any forward-looking statement will be achieved or will prove to be correct. The actual future business, financial position, results of operations and prospects may differ materially from those projected or forecast in the forward-looking statements. Each of the Company and the Managers and their respective affiliates accordingly expressly disclaim any obligation to update, and does not expect to publicly update, or publicly revise, any forward-looking statements or other information contained in this release, whether as a result of new information, future events or otherwise, except as otherwise required by law.

Information to Distributors

MiFID II product governance/target market

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the subscription rights to the new shares and the new shares (collectively, the “Securities”) have been subject to a product approval process, which has determined that such Securities are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market Assessment”).

Notwithstanding the Target Market Assessment, distributors should note that: (i) the price of the Securities may decline and investors could lose all or part of their investment; (ii) the Securities offer no guaranteed income and no capital protection; and (iii) an investment in the Securities is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Offering.For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Securities. Each distributor is responsible for undertaking its own Target Market Assessment in respect of the Securities and determining appropriate distribution channels.

UK MiFIR product governance / UK target market

Solely for the purposes of the product governance requirements of Chapter 3 of the FCA Handbook Product Intervention and Product Governance Sourcebook (the “UK Product Governance Rules”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the UK Product Governance Rules) may otherwise have with respect thereto, the Securities have been subject to a product approval process, which has determined that such Securities are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as clients as defined in paragraph 3 of the FCA Handbook Conduct of Business Sourcebook; and (ii) eligible for distribution through all distribution channels (the “UK Target Market Assessment”).

Notwithstanding the UK Target Market Assessment, distributors (for the purposes of the UK Product Governance Rules) should note that: the price of the Securities may decline and shareholders and investors could lose all or part of their investment; the Securities offer no guaranteed income and no capital protection; and an investment in the Securities is compatible only with shareholders and investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The UK Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Offering.

Furthermore, it is noted that, notwithstanding the UK Target Market Assessment, the Managers will only procure investors who meet the criteria of professional clients and eligible counterparties (except for a public offering to existing shareholders and investors in Austria conducted pursuant to the securities prospectus that has been approved by and registered with the Austrian Financial Market Authority (Finanzmarktaufsichtsbehörde)).

For the avoidance of doubt, the UK Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Chapter 9A or 10A respectively of the FCA Handbook Conduct of Business Sourcebook; or (b) a recommendation to any investor or existing Shareholder in the Company or group of investors or existing shareholders in the Company to invest in, or purchase, or take any other action whatsoever with respect to, the Securities.

Each distributor subject to the UK Product Governance Rules is responsible for undertaking its own target market assessment in respect of the Securities and determining appropriate distribution channels.

Role of Managers

Each of the Managers is acting exclusively for the Company and no-one else in connection with the potential capital increase. They will not regard any other person as their respective clients in relation to the potential capital increase and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice in relation to the potential capital increase, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

In connection with the sale of the Securities, the Managers and any of their affiliates may take up a portion of the securities in the offering as a principal position and in that capacity may retain, purchase, sell, offer to sell for their own accounts such Securities and other securities of the Company or related investments in connection with the sale or otherwise. Accordingly, references in this announcement to the Securities being sold, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, any of the Managers and any of their affiliates acting in such capacity. In addition, any of the Managers and any of their affiliates may enter into financing arrangements (including swaps or contracts for differences) with investors in connection with which the Managers and any of their affiliates may from time to time acquire, hold or dispose of securities of the Company. The Managers do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

None of the Managers or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith.

The Managers may enter into a co-ordination agreement to manage any position that may arise as a result of the crystallisation of their underwriting obligation.
 

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