Synthomer Shares Fall as Company Announces Rights Issue and Reports Loss
Shares of Synthomer, a FTSE 250 chemical supplier, dropped 31% in early trade on Thursday following the company's announcement of plans to raise £276 million ($345.2 million) through a rights issue and capital reorganization. This comes after Synthomer reported a pretax loss for the first half of the year.
Rights Issue and Capital Reorganization
Synthomer is offering 140 million new ordinary shares through the rights issue at a price of 197 pence each. Shareholders will receive six new shares for each consolidated share held. The rights issue is fully underwritten and has the support of the company's largest shareholder, Kuala Lumpur Kepong Berhad Group, who plans to purchase its full entitlement of 37.7 million new shares.
The funds raised from the rights issue will be used to reduce debt and support the company's overall strategy while managing its balance sheet leverage. As part of the capital reorganization, existing shares will be subdivided and converted into intermediate shares and deferred shares, with every 20 intermediate shares being consolidated into one ordinary share.
Financial Performance
In addition to the rights issue, Synthomer reported a pretax loss of £47.8 million for the first half of the year, compared to a profit of £112.3 million during the same period last year. Revenue for the first half was £1.075 billion, down from £1.23 billion in the prior year.
After adjusting for exceptional and one-off items, the adjusted pretax loss for the period was £9.2 million, compared to a profit of £108.0 million last year.
Outlook and Future Expectations
Synthomer stated that trading in July and August remained similar to the first half of the year, with limited visibility and subdued volumes due to challenging macro conditions. However, the company reaffirmed its guidance that it expects to make sequential progress in the second half compared to the first.
All Rights Reserved © 2024
Post a comment