Covestro Secures Major Credit Facility Ahead of Delisting

Covestro finalizes a €1.5 billion revolving credit facility as majority shareholder XRG moves to squeeze out minority holders at €59.46 per share, ensuring operational continuity post-delisting.

In a significant financial move just prior to its expected exit from the public markets, Covestro AG has arranged a substantial new credit line. The Leverkusen-based chemical group finalized a syndicated revolving credit facility amounting to €1.5 billion on March 10. The agreement involves 15 core banks, featuring an initial term of three years and includes two separate one-year extension options.

This strategic financing underscores a clear corporate intention: to ensure business continuity for its core operations under new ownership, even as a squeeze-out procedure moves forward.

A Squeeze-Out Nears Completion

The path to privatization is in its final stages. Majority shareholder XRG P.J.S.C., based in Abu Dhabi, formally submitted its squeeze-out request to Covestro's management board on March 20. The cash compensation for minority shareholders has been set at €59.46 per share. XRG, together with its subsidiary ADNOC International Germany Holding AG, already controls 95.1% of the company's share capital.

The final decision will be made at the Annual General Meeting scheduled for May 19, 2026. Following this, upon entry into the commercial register, all remaining shares will automatically transfer to the majority shareholder. The company's listing on the regulated market will actually terminate earlier, on May 5. Covestro's shares have been trading solely on the General Standard segment since February.

Operational Challenges and Strategic Moves

The establishment of this credit facility occurs against a backdrop of operational strain. The company's most recent fiscal year saw a pronounced downturn, with EBITDA collapsing by approximately 31% to €740 million. Revenue contracted to €12.9 billion. A combination of declining selling prices, adverse currency effects, and industry-wide overcapacity culminated in a net loss of €644 million.

Concurrently, Covestro's cost-saving initiative, STRONG, is underway. The program has achieved savings of around €275 million by the end of 2025, with an annual target of €400 million by 2028. In a separate strategic expansion, the company is planning to acquire two production sites for HDI derivatives from Vencorex, located in Thailand and Texas. While initially slated for completion by the end of 2025, this acquisition is now targeted for the first half of 2026.

Market pricing, however, appears largely detached from these fundamental business developments. The share price, closing at €59.52, trades marginally above the set squeeze-out compensation level. With a 30-day volatility under 3.5%, equity movement is minimal. The market has effectively priced the stock at the impending buyout value, rendering traditional financial metrics and news flow largely irrelevant for current valuation.