Lenzing Group places sustainable bonded loan of over EUR 500 million
Austria-headed wood-based cellulose fiber major Lenzing AG (Lenzing Group) has announced that it has successfully positioned a EUR 500 million bonded loan bound to its sustainability performance.
For this type of loan, the interest is linked to Lenzing’s performance in the area of sustainability and is annually reviewed and assessed by an independent sustainability agency. The MSCI agency, which undertakes the rating in Lenzing’s case, recently awarded the company an A rating.
The innovative and sustainability-based financing of a bonded loan is a consistent step in the implementation of its own corporate strategy “sCore TEN”, with a focus on sustainability and environmental protection.
According to the company, the initial EUR 200 million bond was of such interest to investors from Europe and Asia that the decision was made to increase it to EUR 500 million. Nearly 12 percent of this (US$65 million) was tendered in US dollars.
Interest rate coupled to environmental performance
The average interest rate of the loan is just under 1 percent, through which the Lenzing Group is financed less expensively than with previous bonded loans. The fluctuation margin of the interest rate of +/- 2.5 base points rises or falls depending on Lenzing’s sustainability rating. In the event of an improved rating, the relevant interest savings will be donated on the part of Lenzing.
The total volume of the loan of EUR 500 million will be available to the Lenzing Group in December 2019 and in January 2020 and is further distributed over tranches with terms of five, seven and ten years. In addition, registered bonds will be put into place with a term of 15 years.
The resources will be used for general corporate financing, for the early refinancing of a bond tranche from 2015 and for important sustainable future projects by the Lenzing Group.
Our bonded loan connects attractive conditions to an innovative sustainability-oriented concept. For this, we’ve used the favorable interest environment and secured long-term financing. Sustainability is an important success factor in our corporate strategy. We are firmly convinced that sustainability represents an elementary factor for the economic success of the Lenzing Group, said Thomas Obendrauf, Chief Financial Officer of the Lenzing Group.
The transaction was arranged and structured by BNP Paribas, the Landesbank Baden-Württemberg, and UniCredit. Parts of the bonded loan were tendered via the innovative digital platform Debtvision. Considering the strong interest of domestic and foreign investors, the initial starting volume of EUR 200 million was oversubscribed multiple times.