Roehm Sounds Out Lenders Over A&E; Advent Offers to Inject Additional €200M Equity to Support Extension, €150M to Fund SABIC Functional Forms Acquisition

Roehm is sounding out lenders over an A&E to term out its debt, sources said. The German chemicals company aims to extend its €300 million-equivalent RCF by 2.5 years to July 2028 and its €1.67 billion-equivalent euro and dollar term loan Bs by 2.5 years to January 2029. The group is offering to boost margins on the RCF by 25 bps to 350 bps and on the TLB by 50 bps cashpay/50 bps PIK to E/S+500 bps/550 bps plus 50 bps PIK.

Sponsor Advent is offering to inject €200 million of additional equity to support the A&E, which will help fund the completion of its new methyl methacrylate LiMA plant. The construction of the plant is on track to come online and start scaling up production in the second half of 2024. Roehm expects the Texas-based facility, which will use lower-cost ethylene as a feedstock, to generate in excess of €150 million of incremental run-rate EBITDA once it is fully ramped up.

Advent is also providing €150 million of additional equity to fund its $220 million acquisition of SABIC’s Functional Forms polycarbonate-based films and sheet business, while SABIC is providing a $100 million vendor loan.

Roehm plans to combine its Acrylic Products business with SABIC’s Functional Forms business in a new standalone entity called Polyvantis to create the second-largest global leading sheets and films business. It expects Polyvantis to generate around $700 million of revenue and $50 million to $60 million in mid-cycle adjusted EBITDA.

Post the A&E transaction, Roehm’s total debt will increase to €1.449 billion due to the vendor loan, but net debt will fall to €1.359 billion due to the additional equity, which will boost cash on balance sheet to €312 million. Leverage based on LTM pro forma run-rate adjusted EBITDA of €268 million will be 5.4x, down from 6.7x pre-transaction.

The A&E could launch as early as next week. The additional equity will take Advent’s total contribution to around €1.2 billion, sources noted.

Roehm’s earnings started recovering again in the fourth quarter of 2023. Volumes improved to 137 kilotonnes from 126 kilotonnes in Q4’22. Sales dropped to €376 million from €396 million, but that was mainly as a result of lower prices due to falling raw material costs, while adjusted EBITDA improved to €39 million from €21 million over the same period.

For the full-year 2023, Roehm generated €1.566 billion of revenue, reported EBITDA of €110 million and pro forma run-rate adjusted EBITDA of €278 million.

The group’s capital structure as of December 2023 is below:
 
According to Reorg’s CLO database, Roehm’s loans are held by the following managers. Click HERE to see the full list of holders in the database.
 
To see Roehm’s covenant analysis or to talk to one of our legal analysts, click HERE.

Advent declined to comment.