Synthomer agrees relaxation of debt covenants with banks

Polymer maker Synthomer said it had agreed a relaxation of loan covenants with its banks to provide it increased headroom through to the end of next year.

The company, which last week lowered its profit outlook and scrapped the dividend, said bank debt covenants had been increased to 4x in December 2022, increasing to 4.75x in June 2023 and reverting to 4x in December 2023.

Synthomer said its priority was to return leverage within its target range of 1 - 2x. Last week it outlined plans to generate cash savings of between £150m - £200m in 2023, excluding divestments, via cuts to working capital, capex, operating costs and the suspension of dividend payments.

It also confirmed that it has significantly improved its financing structure having signed a five year, £450m facility with UK Export Finance on terms that are similar to the company's existing revolving credit facility.

Reporting by Frank Prenesti for Sharecast.com