Lenzing Shares Plunge After Announcing Deeply Discounted €300 Million Rights Issue

Shares in Austrian cellulose fiber producer Lenzing (LENV) plunged as much as 14.6% to a 52-week low on Thursday after the company announced a fully underwritten rights issue to raise approximately €300 million.

The capital increase is being offered at a significant discount, a move intended to secure funding for the company's restructuring plan and to fortify its balance sheet.

Details of the Capital Raise

Lenzing is offering 34.76 million new shares to existing shareholders at a subscription price of €8.65 each. According to the company's announcement, this price represents a 42.5% discount to the theoretical ex-rights price based on Wednesday's closing price.

The terms allow existing shareholders to purchase nine new shares for every ten they currently hold. The deal is being managed by a consortium of banks, with BNP Paribas, UniCredit, Commerzbank, and Erste Group acting as joint global coordinators. Raiffeisen Bank International is also serving as an underwriter.

Shareholder Backing and Market Impact

Ad

The sharp decline in Lenzing's stock price reflects the dilutive effect of issuing a large number of new shares at a price substantially below the market level. However, the capital raise has received strong support from the company's key shareholders.

Lenzing's two largest shareholders, B&C Group and Brazil's Suzano, have committed to subscribe to a combined 18.16 million new shares, valued at approximately €157.1 million. Following the transaction, B&C Group will indirectly hold about 39.64% of Lenzing, while Suzano will hold about 12.60%. Oberbank, another significant shareholder, also committed to participating.

Strategic Rationale

The proceeds from the rights issue are earmarked to support a comprehensive restructuring as Lenzing shifts its focus toward nonwovens and scales back traditional textile fiber production. The company is in the process of ceasing production at its plants in Heiligenkreuz, Austria, and Grimsby, UK, and is selling its site in Purwakarta, Indonesia.

Alongside the capital raise, Lenzing has secured up to €300 million in new financing and extended existing arrangements to 2030. The company is targeting €120 million in cost savings against its 2025 baseline and aims to increase its EBITDA by €150 million over the medium term, with a goal of reducing its net debt to less than 2.5 times EBITDA.