Covestro Secures Reduced Credit Facility Amid Integration and Losses

Covestro slashes credit facility to €1.5B after a €644M net loss, acquires Vencorex assets for growth, and sets final squeeze-out price ahead of 2026 delisting.

In a significant financial restructuring ahead of its impending stock market delisting, the chemical company Covestro has negotiated a substantially smaller credit line. This move is a direct response to deep annual losses and a challenging industry climate, even as its integration into the ADNOC-led chemical empire advances.

Strategic Acquisitions Proceed Alongside Cost-Cutting

Despite implementing a stringent savings program, Covestro is using its remaining financial flexibility for strategic expansion. The company has reached an agreement with Vencorex Holding to acquire two production entities located in Thailand and the United States. This transaction is designed to bolster the specialty chemicals producer's capacity for aliphatic isocyanates, targeting growth in Asian and American markets. Completion is scheduled for the current half of the year.

These targeted investments run parallel to the ongoing "STRONG" cost-saving initiative. To date, the program has realized savings of 275 million euros, with the annualized effect expected to reach 400 million euros in the medium term.

Tighter Credit Reflects Operational Strain

The core of the financial recalibration is a new syndicated credit facility agreed with 15 core banks at the end of March. The facility is set at 1.5 billion euros, representing a reduction of exactly one billion euros from the previous arrangement. This adjustment mirrors the company's pressured operational performance.

The past fiscal year saw Covestro's EBITDA plummet by approximately 31% to 740 million euros, culminating in a net loss of 644 million euros. A combination of falling selling prices, unfavorable currency effects, and substantial overcapacity within the chemical sector has severely impacted the balance sheet. Consequently, a dividend for 2025 has been ruled out. With management anticipating no fundamental turnaround in the current year, financial discipline remains the priority.

Final Countdown for Remaining Shareholders

The strategic integration of Covestro as a specialty chemicals platform within Borouge Group International AG was formally completed at the end of March. For remaining minority shareholders, the focus now shifts to the compulsory squeeze-out.

The cash compensation for the squeeze-out has been set at 59.46 euros per share, notably below the initial takeover offer of 62 euros. As the stock concluded its final day of trading at 59.50 euros, the share price is now aligned precisely with this compensation level, effectively eliminating the potential for significant price movements.

The timeline for the delisting is firmly established. Admission to the regulated market will terminate on May 5, 2026. Subsequently, the annual general meeting on May 19 is expected to formally approve the squeeze-out, with the transfer of the last freely traded shares occurring automatically upon entry in the commercial register.