Mutares Launches Bond Buyback as Covenant Breach Forces Debt Reduction Drive

Mutares plans to cut bond debt by up to €135M via quarterly buybacks starting May 8, after a net debt-to-equity covenant breach, backed by €105M capital raise and strong Magirus orders.

The Munich-based holding company is embarking on a significant deleveraging campaign after breaching a key financial covenant, with plans to slash its outstanding bond debt by as much as €135 million over the next 18 months.

Starting May 8, Mutares will offer to repurchase up to €25 million of its 2023/2027 bond for cash, with further quarterly tranches of at least €25 million to follow. The target is to bring the outstanding amount down to between €250 million and €300 million by the end of 2026, from the current €385 million.

The buyback programme was triggered by a covenant violation: the ratio of net debt to equity exceeded the limit set in the bond terms. Management blames valuation effects, weaker transaction activity in the fourth quarter of 2025, and higher lease liabilities. Bondholders have granted substantial forbearance, and the board expects the metric to return to compliance by June 2026, supported by the recently signed acquisitions of Wärtsilä Gas Solutions and SABIC’s ETP business.

The necessary liquidity comes from a recent capital raising that generated roughly €105 million in gross proceeds. That cash injection gives Mutares the firepower to start chipping away at its debt mountain while keeping its acquisition pipeline alive.

On the operating front, the picture is more encouraging. Portfolio company Magirus posted a record order intake in the first quarter, pushing the order book comfortably above €800 million. That backlog secures capacity utilisation for the whole of 2026 and a large portion of 2027 — a solid buffer against any near-term economic headwinds.

For the full year, management is sticking with its guidance: group revenue between €7.9 billion and €9.1 billion, and a holding company net profit of €165 million to €200 million. Exit proceeds are expected to comfortably exceed last year’s €230 million, providing further ammunition for debt reduction and shareholder returns.

Shareholders are in line for a dividend of at least €2.00 per share, to be proposed at the annual general meeting on July 3. That figure now serves as a floor, with a potential performance kicker if exits go well.

The stock is trading at around €26.45, roughly 22% below its level twelve months ago and down nearly 12% since the start of the year. The shares have staged a modest recovery from their April lows, but volatility remains elevated as the market digests the competing narratives of operational strength and balance sheet strain.

All eyes will be on the first-quarter report due May 12. Investors will be looking for evidence that the deleveraging plan is gaining traction, and for updates on the SABIC deal closing, which is targeted for the current quarter. The numbers from Magirus will also be closely watched, given its outsized contribution to the group’s order pipeline.