Lenzing Rights Issue Moves to Allocation Stage as Berenberg Flags Slow Margin Recovery

Lenzing booked 9,654,547 subscription rights as its EUR 300 million cash capital increase advances; Berenberg doubts a swift margin recovery.

Lenzing's long-flagged recapitalisation crossed a procedural threshold on Monday, when B&C KB Holding GmbH was booked 9,654,547 subscription rights for the fibre maker's cash capital increase. The allocation, executed off-exchange, carried a stated price of EUR 0 per right under ISIN AT0000A3XCR6 — a technical step that clears the way for the subscription period now getting under way.

The Austrian group intends to issue 34,756,362 new shares at a subscription price of EUR 8.65 apiece, targeting gross proceeds of roughly EUR 300 million. Existing holders are being offered nine new shares for every ten they already own, a 10:9 ratio that will substantially enlarge the share count. The subscription window is expected to run from 6 to 20 October, with the rights themselves slated for trading on the Vienna Stock Exchange from 6 to 14 October. Any shares left unsubscribed are to be placed through an international private placement shortly afterwards. Delivery and the start of trading in the new stock are pencilled in for 23 October, subject to the capital increase being entered in the commercial register in time.

Monday also served as the record date for entitlement, following Friday's ex-rights trading in the existing shares. For investors, the coming days mark the point at which they must decide whether to exercise their rights or sell them into the market.

Berenberg Questions the Pace of the Turnaround

Sentiment around the equity, however, is anything but buoyant. Berenberg has voiced doubt that higher viscose and cotton prices are feeding through to Lenzing's operating results to the extent the market had hoped, and it questions whether consensus estimates for operating profit can be raised over the current cycle. That scepticism carries weight, since a swift margin recovery is widely seen as the precondition for any re-rating of the stock.

Those muted operating prospects sit alongside a sweeping transformation programme. Lenzing plans to channel the fresh capital into strengthening its balance sheet and advancing its "Grow Nonwovens, Reset Textiles" strategy.

A Steep Discount to the Market Price

The shares last changed hands at EUR 14.02, giving the ATX constituent a market capitalisation of EUR 720.51 million. That leaves the stock down 18% since the start of the year. Against that backdrop, the EUR 8.65 issue price represents a pronounced discount to the prevailing quote — and with the transaction fully underwritten, the intended inflow is secured regardless of how existing holders respond. The sheer scale of the new share issuance relative to the current equity base goes some way to explaining the caution evident across the trading venues.

For shareholders, the immediate task is straightforward: with rights trading about to open, the window for choosing between subscribing and selling is now firmly in view.