REG - Synthomer PLC - Rights Issue

SynthomerAnnouncement

07/09/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230907:nRSG6560La&default-theme=true

RNS Number : 6560L  Synthomer PLC  07 September 2023

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, HONG KONG, SINGAPORE, THE UNITED
ARAB EMIRATES AND THE UNITED STATES AND ANY OTHER JURISDICTION TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT. NOTHING HEREIN SHALL CONSTITUTE AN OFFERING OF
ANY SECURITIES. NOTHING IN THIS ANNOUNCEMENT SHOULD BE INTERPRETED AS A TERM
OR CONDITION OF THE RIGHTS ISSUE. ANY DECISION TO PURCHASE, SUBSCRIBE FOR,
OTHERWISE ACQUIRE, SELL OR OTHERWISE DISPOSE OF ANY NIL PAID RIGHTS, FULLY
PAID RIGHTS OR NEW ORDINARY SHARES MUST BE MADE ONLY ON THE BASIS OF THE
INFORMATION CONTAINED IN THE PROSPECTUS ONCE PUBLISHED. COPIES OF THE
PROSPECTUS WILL, FOLLOWING PUBLICATION, BE AVAILABLE FROM THE REGISTERED
OFFICE OF THE COMPANY AND ON ITS WEBSITE AT
WWW.SYNTHOMER.COM/INVESTOR-RELATIONS/, SUBJECT TO APPLICABLE LAW AND
REGULATIONS. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION. FOR IMMEDIATE RELEASE

7 September 2023

SYNTHOMER plc

stronger foundations to drive strategy delivery

Proposed 6 for 1 Rights Issue of 140,200,818 New Ordinary Shares at 197 pence
per New Ordinary Share
and
Proposed Capital Reorganisation of 1 New Ordinary Share of 1 pence nominal
value for every 20 Existing Ordinary Shares of 10 pence nominal value

Further to the announcement of its interim results for the for the six months
ended 30 June 2023, Synthomer plc ("Synthomer" or the "Company", and together
with its direct and indirect subsidiaries, the "Group"), a leading global
producer of high-performance speciality chemical products, today announces
that it proposes to raise gross proceeds of approximately £276 million by way
of a rights issue (the "Rights Issue").

In conjunction with the Rights Issue, Synthomer is proposing to implement a
capital reorganisation, comprising a sub-division and share consolidation, as
described more fully below.

HIGHLIGHTS

·      The purpose of the Rights Issue is to support reduction in the
Group's leverage and provide stronger foundations to focus on delivering its
speciality solutions strategy

·      By increasing covenant headroom the Rights Issue will allow
greater focus on strategic delivery and long-term value creation in addition
to short term cash preservation, as well as a reduction of downside risks from
near-term macroeconomic uncertainty for all stakeholders

·      At the Capital Markets Day in October 2022, Synthomer's new
management team announced its "Focus, Strengthen, Grow" strategy to increase
the speciality weighting of its portfolio and focus on higher growth
end-markets

·      Over the last 18 months, however, Synthomer has navigated an
extremely challenging market backdrop, during which time a temporary weakness
in demand across most of its end-markets and geographies, exacerbated by
supply chain disruptions and sustained higher raw material and energy costs,
has affected financial performance

·      The Group's earnings have reduced temporarily but significantly,
and combined with the debt taken on to finance the Eastman Acquisition
announced in 2021 and completed in 2022 has resulted in the Group's leverage
increasing significantly, to 5.5x covenant net debt, based on EBITDA as at 30
June 2023

·      Substantial and decisive management actions have been
successfully executed to preserve cash and manage debt, including refinancing
one debt facility and putting in place two other ones to strengthen its
financial liquidity position, initiating a number of cash conservation
measures, and identifying self-help cost-saving measures and disposals of
non-core businesses, including the divestment of the Laminates, Films and
Coated Fabrics Businesses which was completed in February 2023 and which
generated total net proceeds of $269 million

·      The Board believes that the earnings power of the Group is more
than double current levels (being LTM EBITDA of £158m) in the medium-term,
based on a combination of executing its near-term management actions,
end-market volume recovery, and delivery of the Group's strategy

·      Stronger foundations, supported by volume recovery, will underpin
delivery of the Group's medium-term ambitions, including the medium-term
targets set out last October: mid-single-digit growth in constant currency
over the cycle, EBITDA margins above 15% and mid-teens return on invested
capital

·      The net proceeds of the Rights Issue will initially be utilised
to reduce borrowings under the Revolving Credit Facility and provide
flexibility to deliver strategy and manage balance sheet leverage

o  The Rights Issue will result in a pro forma reduction in the covenant net
debt based on EBITDA ratio from 5.5x to 3.8x as at 30 June 2023

·      On 5 September 2023, Synthomer entered into the RCF Amendment and
Extension, which will extend the Revolving Credit Facility maturity date from
31 May 2025 to 31 July 2027 and amend total commitments to $400 million

·      Reducing leverage further towards the 1-2x target range by the
end of 2024 remains a key priority, supported by further divestments and
increased earnings power

·      The Company's largest shareholder, Kuala Lumpur Kepong Berhad
Group (holding approximately 26.9% of the total voting rights in the Company
as at 6 September 2023, being the latest practicable date prior to the date of
this announcement), has irrevocably committed to take up its full entitlement
pursuant to the Rights Issue and to vote in favour of the Resolutions

·      The Board believes the Rights Issue will allow the Company to
focus its resources on strategic execution and long-term value creation for
shareholders from its platforms of leading businesses in attractive growth
segments

BACKGROUND TO AND REASONS FOR THE RIGHTS ISSUE

Synthomer's portfolio has evolved over a number of years through both organic
growth and significant acquisitions, notably OMNOVA completed in 2020 and the
Eastman Acquisition completed in 2022. Synthomer's new management team set out
a refreshed strategy in October 2022 to deliver growth and substantial margin
improvement. By increasing the speciality weighting of the Group's product
portfolio, leveraging the Group's enhanced global footprint and reducing
structural complexity within the Group, the Board believes that the Group will
become a more focused, more resilient and higher quality speciality chemicals
business in the medium-term. Management outlined plans to deploy a more
focused capital and resource allocation framework. Portfolio rationalisation,
which aims to increase the speciality weighting of the business, is already
underway.

The Group today has many market-leading businesses in end-markets with
attractive growth prospects, however, during the last 18 months, several
factors have combined to increase significantly the Group's leverage. Market
conditions have rapidly deteriorated, significantly, but temporarily,
weakening recent Group performance. The COVID-19 pandemic initially boosted
demand for NBR used in medical gloves but resulted in oversupply later.
Ongoing Russian military action in Ukraine has caused economic volatility,
impacting the Company's supply chain, costs, and energy prices. High inflation
and interest rate rises slowed industrial activity and reduced demand in most
of the Group's markets, worsened by competition from Asia. The Adhesive
Solutions division faced raw material and reliability challenges, which are
being addressed by the new divisional leadership team.

Deteriorating market conditions, which followed a major acquisition the Group
announced in 2021 and completed in early 2022, predominantly financed from
debt, significantly, but temporarily, weakened recent Group earnings
performance.

To navigate the current challenging environment, the Group has taken
substantial and decisive actions to preserve cash and manage debt. Financial
liquidity has been improved by refinancing credit facilities and implementing
cost-saving measures. As of 30 June 2023, Synthomer had over £400 million in
available liquidity. A £150-200 million cash management programme has been
initiated, which includes a reduction in capital expenditure, working capital
optimisation and dividend suspension. Additionally, the Group identified £30
million in cost-saving measures, with £20 million to be realised in the
second half of 2023. The strategic divestment of its non-core Laminates and
Films and Coated Fabrics Businesses for $269 million completed in February
2023, which also lowered the Group's net debt.

Notwithstanding the successful execution of these mitigation actions, the
Group's covenant leverage position remains elevated at 5.5x net debt, based on
EBITDA as at 30 June 2023.

The Rights Issue will enable the Group to increase focus on strategic delivery
and long-term value creation in addition to short-term cash preservation, as
well as reducing the downside risks from near-term macroeconomic uncertainty
for all stakeholders.

The Board believes that the medium-term earnings power of the Group is more
than double current levels based on a combination of executing its near-term
management actions, end-market volume recovery and strategic delivery. These
will also drive Synthomer to become a more focused, more resilient and higher
quality speciality chemicals platform in the medium-term, with the business
continuing to target mid-single digit revenue growth, 15%+ EBITDA margin and
mid-teens return on invested capital. The Group believes that with the
stronger foundations achieved by the Rights Issue, supported by volume
recovery, will underpin the delivery of the Group's strategy and medium-term
ambitions, and thereby create long-term value.

KLK Intentions

The Company's largest shareholder, Kuala Lumpur Kepong Berhad Group ("KLK")
(which holds approximately 26.9% of the total voting rights in the Company as
at 6 September 2023, being the latest practicable date prior to the date of
this announcement), has irrevocably committed to take up its full entitlement
pursuant to the Rights Issue and to vote in favour of the Resolutions. This
will result in KLK acquiring an aggregate of 37,676,850 New Ordinary Shares,
representing approximately 26.9% of the New Ordinary Shares to be issued
pursuant to the Rights Issue.

Directors' Intentions

Each Director who is able to participate in the Rights Issue and/or vote at
the General Meeting has confirmed in writing their intention to take up their
entitlement in full, or in part, to subscribe for New Ordinary Shares under
the Rights Issue in respect of their respective holding of Existing Ordinary
Shares and intends to vote in favour of the Resolutions.

Prospectus

A prospectus (the "Prospectus") setting out full details of the Rights Issue
is expected to be published on Synthomer's website at
www.synthomer.com/investor-relations/ later today.

The Prospectus will be submitted to the National Storage Mechanism and will be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism following publication.

The preceding summary should be read in conjunction with the full text of the
following announcement, together with the Prospectus.

Unless the context otherwise requires, words and expressions defined in the
Prospectus shall have the same meanings in this announcement.

Indicative summary timetable of principal events

 Announcement of the Rights Issue and publication of the Prospectus             7 September 2023
 General Meeting                                                                12:30 p.m. on 25 September 2023
 Record date for the Capital Reorganisation                                     6:00 p.m. on 25 September 2023
 Admission and dealings in the Consolidated Ordinary Shares commence on the     8:00 a.m. on 26 September 2023
 London Stock Exchange
 Record Date for entitlements under the Rights Issue                            Close of business on 26 September 2023
 Despatch of Provisional Allotment Letters (to Qualifying Non-CREST             27 September 2023
 Shareholders only)
 Consolidated Ordinary Shares marked "ex-rights" by the London Stock Exchange   8:00 a.m. on 28 September 2023
 Admission of, and commencement of dealings in, Nil Paid Rights on the London
 Stock Exchange; start of subscription period

                                                                                8:00 a.m. on 28 September 2023
 Latest time and date for acceptance, payment in full and registration of       11:00 a.m. on 12 October 2023
 renunciation of Provisional Allotment Letters
 Announcement of the results of the Rights Issue through a Regulatory           By 8:00 a.m. on 13 October 2023
 Information Service
 Dealings in New Ordinary Shares, fully paid, commence on the London Stock      8:00 a.m. on 13 October 2023
 Exchange

 

The Rights Issue is fully underwritten (in respect of the Non-KLK Rights Issue
Shares) by Goldman Sachs International, J.P. Morgan Securities plc and Morgan
Stanley & Co. International plc acting as Joint Global Coordinators and
Joint Bookrunners and Citi acting as Joint Bookrunner, and (in respect of the
KLK Rights Issue Shares) by KLK. J.P. Morgan Cazenove is acting as sole
sponsor to the Company.

The person responsible for making this announcement on behalf of Synthomer is
Anant Prakash, Chief Counsel & Company Secretary.

For further information, please contact:

 Synthomer plc                                                                 IR@synthomer.com (mailto:IR@synthomer.com)
 Michael Willome

 Lily Liu                                                                      +44 (0) 1279 775 306

Faisal Tabbah
 J.P. Morgan Cazenove (Sole Sponsor, Joint Corporate Broker, Joint Bookrunner  +44 (0) 20 7742 4000
 and Joint Global Coordinator)

 Richard Perelman

 Alia Malik

 Charles Oakes

 Will Holyoak
 Morgan Stanley (Joint Corporate Broker, Joint Bookrunner and Joint Global     +44 (0) 20 7425 8000
 Coordinator)

 Andrew Foster

 Shirav Patel

 Alex Smart

 Emma Whitehouse
 Goldman Sachs (Joint Bookrunner and Joint Global Coordinator)                 +44 (0) 20 7774 1000

 Nick Harper

 Bertie Whitehead

 Clemens Tripp

 Warren Stables
 Citi (Joint Bookrunner)                                                       +44 (0) 20 7500 5000

 Robert Way

 Sean Weissenberger

 Patrick Evans

 Ram Anand
 Teneo                                                                         +44 (0) 20 3603 5220

 Charles Armitstead

IMPORTANT NOTICES

This announcement has been issued by and is the sole responsibility of the
Company. The information contained in this announcement is for background
purposes only and does not purport to be full or complete. No reliance may or
should be placed by any person for any purpose whatsoever on the information
contained in this announcement or on its accuracy, fairness or completeness.
The information in this announcement is subject to change without notice.

This announcement is not a prospectus (or a prospectus equivalent document)
but an advertisement for the purposes of the Prospectus Regulation Rules of
the Financial Conduct Authority ("FCA"). Neither this announcement nor
anything contained in it shall form the basis of, or be relied upon in
conjunction with, any offer or commitment whatsoever in any jurisdiction.
Investors should not acquire any Nil Paid Rights, Fully Paid Rights or New
Ordinary Shares referred to in this announcement except on the basis of the
information contained in the Prospectus to be published by the Company in
connection with the Rights Issue.

A copy of the Prospectus will, following publication, be available from the
registered office of the Company and on its website at
www.synthomer.com/investor-relations/. Neither the content of the Company's
website nor any website accessible by hyperlinks on the Company's website is
incorporated in, or forms part of, this announcement. The Prospectus will
provide further details of the New Ordinary Shares, the Nil Paid Rights and
the Fully Paid Rights being offered pursuant to the Rights Issue.

This announcement (and the information contained herein) is not for release,
publication or distribution, directly or indirectly, in whole or in part, in,
into or within the United States of America, its territories and possessions,
any State of the United States or the District of Columbia (collectively, the
"United States"). This announcement is not an offer for sale or the
solicitation of an offer to purchase securities in the United States.
Securities may not be offered or sold in the United States absent registration
under the US Securities Act of 1933, as amended (the "US Securities Act"), or
an exemption therefrom. The Nil Paid Rights, the Fully Paid Rights and the New
Ordinary Shares have not been and will not be registered under the US
Securities Act or under any securities laws of any state or other jurisdiction
of the United States and may not be offered, sold, pledged, taken up,
exercised, resold, renounced, transferred or delivered, directly or
indirectly, in or into the United States except pursuant to an applicable
exemption from, or in a transaction not subject to, the registration
requirements of the US Securities Act and in compliance with any applicable
securities laws of any state or other jurisdiction of the United States or
other jurisdiction. There will be no public offer of the Nil Paid Rights, the
Fully Paid Rights or the New Ordinary Shares in the United States. Subject to
certain limited exceptions, Provisional Allotment Letters have not been, and
will not be, sent to, and Nil Paid Rights have not been, and will not be,
credited to the CREST account of, any Qualifying Shareholder with a registered
address in or that is known to be located in the United States, or to holders
of the Synthomer's American depositary shares. None of the New Ordinary
Shares, the Nil Paid Rights, the Fully Paid Rights or the Provisional
Allotment Letters, this announcement or any other document connected with the
Rights Issue has been or will be approved or disapproved by the United States
Securities and Exchange Commission or by the securities commissions of any
state or other jurisdiction of the United States or any other regulatory
authority, nor have any of the foregoing authorities passed upon or endorsed
the merits of the offering of the New Ordinary Shares, the Nil Paid Rights or
the Fully Paid Rights, or the accuracy or adequacy of the Provisional
Allotment Letters, this announcement or any other document connected with the
Rights Issue. Any representation to the contrary is a criminal offence in the
United States.

This announcement is for information purposes only and is not intended to and
does not constitute or form part of any offer or invitation to purchase or
subscribe for, or any solicitation to purchase or subscribe for, Nil Paid
Rights, Fully Paid Rights or New Ordinary Shares or to take up any
entitlements to Nil Paid Rights in any jurisdiction. No offer or invitation to
purchase or subscribe for, or any solicitation to purchase or subscribe for,
Nil Paid Rights, Fully Paid Rights or New Ordinary Shares or to take up any
entitlements to Nil Paid Rights will be made in any jurisdiction in which such
an offer or solicitation is unlawful. The information contained in this
announcement and the Prospectus is not for release, publication or
distribution to persons in Australia, Canada, Hong Kong, Singapore, the United
Arab Emirates and the United States, and any other jurisdiction where the
extension or availability of the Rights Issue (and any other transaction
contemplated thereby) would breach any applicable law or regulation, and,
subject to certain exceptions, should not be distributed, forwarded to or
transmitted in or into any jurisdiction, where to do so might constitute a
violation of local securities laws or regulations.

The distribution of this announcement, the Prospectus, the Provisional
Allotment Letter and the offering or transfer of Nil Paid Rights, Fully Paid
Rights or New Ordinary Shares into jurisdictions other than the United Kingdom
may be restricted by law, and, therefore, persons into whose possession this
announcement, the Prospectus, the Provisional Allotment Letter and/or any
accompanying documents comes should inform themselves about and observe any
such restrictions. Any failure to comply with any such restrictions may
constitute a violation of the securities laws of such jurisdiction. In
particular, subject to certain exceptions, this announcement, the Prospectus
(once published) and the Provisional Allotment Letters (once printed) should
not be distributed, forwarded to or transmitted in or into Australia, Canada,
Hong Kong, Singapore, the United Arab Emirates and the United States, or any
other jurisdiction where the extension or availability of the Rights Issue
(and any other transaction contemplated thereby) would breach any applicable
law or regulation.

This announcement does not constitute a recommendation concerning any
investor's options with respect to the Rights Issue. The price and value of
securities can go down as well as up. Past performance is not a guide to
future performance. The contents of this announcement are not to be construed
as legal, business, financial or tax advice. Each shareholder or prospective
investor should consult his, her or its own legal adviser, business adviser,
financial adviser or tax adviser for legal, financial, business or tax advice.

NOTICE TO ALL INVESTORS

Each of Goldman Sachs International ("Goldman Sachs"), J.P. Morgan Securities
plc (which conducts its UK investment banking business as J.P. Morgan
Cazenove) ("J.P. Morgan Cazenove"), Morgan Stanley & Co. International plc
("Morgan Stanley") and Citigroup Global Markets Limited ("Citi") is authorised
by the Prudential Regulation Authority and regulated by the FCA and the
Prudential Regulation Authority in the United Kingdom. Each of Goldman Sachs,
J.P. Morgan Cazenove, Morgan Stanley and Citi is acting exclusively for
Synthomer plc and no one else in connection with this announcement and the
Rights Issue will not be responsible to anyone other than Synthomer plc for
providing the protections afforded to its clients nor for providing advice to
any person in relation to the Rights Issue or any matters referred to in this
announcement.

None of Goldman Sachs, J.P. Morgan Cazenove, Morgan Stanley or Citi, nor any
of their respective subsidiaries, branches or affiliates, nor any of their
respective directors, officers or employees owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is not a
client of Goldman Sachs, J.P. Morgan Cazenove, Morgan Stanley or Citi in
connection with the Rights Issue, this announcement, any statement contained
herein, or otherwise.

 INFORMATION TO DISTRIBUTORS

Solely for the purposes of the product governance requirements of Chapter 3 of
the FCA Handbook Product Intervention and Product Governance Sourcebook (the
"UK Product Governance Requirements"), and disclaiming all and any liability,
whether arising in tort, contract or otherwise, which any "manufacturer" (for
the purposes of the UK Product Governance Requirements) may otherwise have
with respect thereto, the Nil Paid Rights, Fully Paid Rights and the New
Ordinary Shares have been subject to a product approval process, which has
determined that they each are: (a) compatible with an end target market of
retail investors and investors who meet the criteria of professional clients
and eligible counterparties, each as defined in Chapter 3 of the FCA Handbook
Conduct of Business Sourcebook; and (b) eligible for distribution through all
permitted distribution channels (the "Target Market Assessment").
Notwithstanding the Target Market Assessment, "distributors" (for the purposes
of the UK Product Governance Requirements) should note that: the price of the
Nil Paid Rights, Fully Paid Rights and the New Ordinary Shares may decline and
investors could lose all or part of their investment; the Nil Paid Rights,
Fully Paid Rights and the New Ordinary Shares offer no guaranteed income and
no capital protection; and an investment in the Nil Paid Rights, Fully Paid
Rights and the New Ordinary Shares is compatible only with investors who do
not need a guaranteed income or capital protection, who (either alone or in
conjunction with an appropriate financial or other adviser) are capable of
evaluating the merits and risks of such an investment and who have sufficient
resources to be able to bear any losses that may result therefrom. The Target
Market Assessment is without prejudice to any contractual, legal or regulatory
selling restrictions in relation to the Rights Issue. Furthermore, it is noted
that, notwithstanding the Target Market Assessment, the Underwriters will only
procure investors who meet the criteria of professional clients and eligible
counterparties.

 

For the avoidance of doubt, the Target Market Assessment does not constitute:
(i) an assessment of suitability or appropriateness for the purposes of
Chapters 9A or 10A, respectively, of the FCA Handbook Conduct of Business
Sourcebook; or (ii) a recommendation to any investor or group of investors to
invest in, or purchase, or take any other action whatsoever with respect to,
the Nil Paid Rights, Fully Paid Rights and the New Ordinary Shares. Each
distributor is responsible for undertaking its own target market assessment in
respect of the Nil Paid Rights, Fully Paid Rights and the New Ordinary Shares
and determining appropriate distribution channels.

 

FORWARD-LOOKING STATEMENTS

This announcement contains forward-looking statements, including with respect
to financial information, that are based on current expectations or beliefs,
as well as assumptions about future events. These forward-looking statements
can be identified by the fact that they do not relate only to historical or
current facts. In some cases, forward-looking statements use words such as
"anticipate", "target", "expect", "estimate", "intend", "plan", "goal",
"believe", "will", "may", "should", "would", "could", "is confident", or other
words of similar meaning.

None of the Company, its officers, advisers or any other person gives any
representation, assurance or guarantee that the occurrence of the events
expressed or implied in any forward-looking statements in this announcement
will actually occur, in part or in whole.

No undue reliance should be placed on any such statements because they speak
only as at the date of this announcement and, by their very nature, they are
subject to known and unknown risks and uncertainties and can be affected by
other factors that could cause actual results, and the Company's plans and
objectives, to differ materially from those expressed or implied in the
forward-looking statements. No representation or warranty is made that any
forward-looking statement will come to pass. You are advised to read the
Prospectus when published and the information incorporated by reference
therein in their entirety, and, in particular, the section of the Prospectus
headed "Risk Factors", for a further discussion of the factors that could
affect the Group's future performance and the industry in which it operates.
In light of these risks, uncertainties and assumptions, the events described
in the forward-looking statements, including statements regarding prospective
financial information, in this announcement may not occur. In addition, even
if the Group's actual results of operations, financial condition and the
development of the business sectors in which it operates are consistent with
the forward-looking statements contained in the Prospectus, those results or
developments may not be indicative of results or developments in subsequent
periods. These statements are not fact and should not be relied upon as being
necessarily indicative of future results, and readers of this announcement are
cautioned not to place undue reliance on the forward-looking statements,
including those regarding prospective financial information.

No statement in this announcement is intended as a profit forecast or estimate
for any period, and no statement in this announcement should be interpreted to
mean that underlying operating profit for the current or future financial
years would necessarily be above a minimum level, or match or exceed the
historical published operating profit or set a minimum level of operating
profit, nor that earnings or earnings per share or dividend per share for the
Company for the current or future financial years would necessarily match or
exceed the historical published earnings or earnings per share or dividend per
share for the Company.

Neither the Company nor any of the Underwriters are under any obligation to
update or revise publicly any forward-looking statement contained within this
announcement, whether as a result of new information, future events or
otherwise, other than in accordance with their legal or regulatory obligations
(including, for the avoidance of doubt, the Prospectus Regulation Rules, the
Listing Rules, MAR, FSMA and Disclosure Guidance and Transparency Rules).
Additionally, statements of the intentions or beliefs of the board of
directors of the Company reflect the present intentions and beliefs of the
board of directors of the Company as at the date of this announcement and may
be subject to change as the composition of the board of directors of the
Company alters, or as circumstances require.

Synthomer PLC

6 FOR 1 FULLY UNDERWRITTEN RIGHTS ISSUE TO RAISE GROSS PROCEEDS OF
APPROXIMATELY £276 MILLION

1.         INTRODUCTION TO THE RIGHTS ISSUE

Synthomer announces today that it proposes to raise gross proceeds of
approximately £276 million through a Rights Issue.

Pursuant to the Rights Issue and taking into account the Capital
Reorganisation, Synthomer is proposing to offer 6 New Ordinary Shares for
every 1 Consolidated Ordinary Share held on the Record Date.

This is equivalent to 6 New Ordinary Shares for every 20 Existing Ordinary
Shares, based on a Consolidation Ratio of 1 Consolidated Ordinary Share in
substitution for every 20 Existing Ordinary Shares.

Taking into account the Capital Reorganisation, the Rights Issue Price
represents a discount of (83.8%) to the Consolidated Closing Price on 6
September 2023 (the last Business Day prior to the date of this announcement),
and a discount of (42.5%) to the theoretical ex-rights price of 343 pence per
Existing Ordinary Share calculated by reference to the Consolidated Closing
Price on the same basis.

The Rights Issue is fully underwritten (in respect of the Non-KLK Rights Issue
Shares) by Goldman Sachs International, J.P. Morgan Securities plc, Morgan
Stanley & Co. International plc and Citigroup Global Markets Limited, and
(in respect of the KLK Rights Issue Shares) by KLK.

2.         BACKGROUND TO THE RIGHTS ISSUE
2.1       SYNTHOMER'S STRATEGY AND STRENGTHS

Strengths

The Directors believe that the following are among the Group's key competitive
strengths:

(i) Global speciality chemicals company with leading positions in its markets

Synthomer is a global speciality chemicals company which is one of the world's
leading suppliers of water-based polymers, with a number of its product types
holding market-leading positions globally, as well as more specifically in
Europe, the United States and the Middle East.

As a speciality chemicals producer, the Group channels its technical
expertise, customer and end-market knowledge to help customers develop these
and other end products. The Group's long-term customer partners benefit from
the Group's knowledge and understanding of their technical needs, the Group's
customer service and R&D, which has allowed the Group to develop
innovative solutions which help its customers' businesses.

As of 1 January 2023, the Group reorganised its divisional structure along
three new, market focused divisions, to better serve the Group's end-market
customers, comprised of: (i) Coatings & Construction Solutions, (ii)
Adhesive Solutions and (iii) Health & Protection and Performance
Materials. The new divisions and the production areas and markets they focus
on and serve will be described in greater detail in the Prospectus.

The Coatings & Construction Solutions and Adhesive Solutions divisions
form the core strategic growth areas of the business. The Health &
Protection and Performance Materials division includes the NBR base business
as well as the business units which were identified as non-core as part of the
strategic review in 2022.

The Group's new Coatings & Construction Solutions division brings together
a range of the Group's businesses focused on the coatings and construction
end-markets, reflecting the Group's strategy to strengthen its position in
these markets and to improve its portfolio through sustainable innovation and
customer value propositions. It is the Group's largest division in terms of
both revenue and EBITDA contribution. The Group is one of the leading
suppliers in Europe across each of the Group's key coatings and construction
products.

The Group's Adhesive Solutions division has one of the broadest offerings of
adhesive solutions products in the industry, with leading manufacturing
positions in EMEA and the Americas across all tackifier product groups.

The Group's Health & Protection and Performance Materials division
includes products that enhance protection and performance in a wide range of
industries. Globally, the Group is the second largest producer of NBR latex by
volume (which the Group's customers use in the manufacturing of medical
gloves).

(ii) Attractive end-markets with strong long-term growth outlook

The Group's portfolio of products serves a wide range of geographies and
end-markets. Within its core strategic growth markets, served by its
speciality businesses, there are significant R&D capabilities and a high
level of technical expertise required to develop the chemical products the
Group produces.

The Group's R&D is driven largely by its ability to apply technical
know-how, rather than on pure research, hence making it difficult for new and
less established entrants to compete in these markets and across these product
types. Moreover, the Group believes that it tends to not only compete within
these markets on product price but that it also competes because of the
quality of technical services that the Group provides to customers alongside
the products themselves. The Group's new product development, innovation,
technical services provision and tailored solutions add value to customers'
end products and help differentiate the Group from other competing companies.
The Group also seeks to anticipate market trends and customer requirements as
it believes this will continue to enable it to deliver improved products with
better margins and product differentiation among customers. Overall, this
allows the Group to maintain margins and protect against low-cost market
entrants.

In its base businesses, principally comprising the NBR business, the Group
believes it is able to leverage its market leading position and will, by
strengthening cost competitiveness and driving customer intimacy, be able to
harness the long-term demand growth expected in this market.

The Group believes its presence in the end-markets for each of the Group's
divisions is supported by favourable market dynamics. For example, the Group's
speciality businesses within the Coatings & Construction Solutions and
Adhesive Solutions divisions were successful in passing through substantial
increases in raw material and energy costs in 2022 in most of their markets,
demonstrating the resilience of these speciality businesses over base
businesses. Both divisions sustained EBITDA margins of 12% for the year ended
31 December 2022, despite unit material costs reaching record levels in some
cases. The Group's focus on more differentiated products and robust pricing
management contributed to solid performance in most of the Group's major
businesses in 2022, particularly in the US.

The Group's continuing revenue by division for the 12 months ending 30 June
2023 were: Coatings & Construction Solutions (40.3%), Adhesive Solutions
(29.5%), Health & Protection and Performance Materials (30.2%).

The Group's diversified and customer focused approach enables the Group to
address changing conditions in the end-markets of each of the Group's
divisions:

Coatings & Construction Solutions

Both coatings and construction end-markets have historically been driven by
GDP+ growth, and require specialised, highly differentiated products with
sustainability benefits. The global market for coatings and construction is
estimated to grow at a CAGR of approximately 4% per annum from 2020 to 2025.

·       Coatings: Increasing regulatory requirements and the Group's
customers' ambitions to use more sustainable products continues to deliver
growth opportunities for water-based coatings technology, in which the Group
is a leader amongst its peers.

·       Construction: The demand for the Group's portfolio of
construction products has been driven by favourable megatrends including
accelerated urbanisation and increased chemical usage due to the increased
professionalism of the construction business. The Group's capabilities in
innovation give the Group the potential to grow its presence in these markets
and the Group has a strong innovation pipeline across the construction
end-market.

·       Energy Solutions: As a supplier of speciality wellbore
chemicals, the Group offers a wide range of solutions including fluid loss
control and sealing, emulsifiers, lubricants and rheological modifiers for
drilling fluids. The Group also offers flow control and properties enhancement
in cementing operations, gel additives for hydraulic fracturing fluids and
strengthening agents. The Group designs polymers that meet conventional and
unconventional drilling and completion requirements.

·       Consumer Materials: This part of the Group's business comprises
fibre bonding and SBR latex for foam applications.

Adhesive Solutions

The Group's Adhesive Solutions division serves growth end-markets such as
tapes and labels, packaging, and tyres which are underpinned by sustainability
trends and with strong revenue synergies with the Group's other divisions. The
overall market demand for adhesive solutions is estimated to grow at a CAGR of
approximately 3-4% per annum from 2022 to 2025.

Across the Adhesive Solutions division, the Group has more than 300 customers
and sells products in more than 600 locations around the world. The Group has
strong relationships with many of its customers and certain end-users, with an
average customer relationship length of approximately 15 years and in many
cases much longer than that. This helps the Group understand the needs of
customers and develop a uniquely market focused innovation pipeline. Within
Adhesive Solutions, the Group is continuing to focus on improving asset and
supply chain reliability, broadening the Group's raw material supply and
reducing working capital and cost levels. The Group is also exploring
investment opportunities, such as through the recently committed expansion in
its capacity to deliver speciality APOs.

Health & Protection and Performance Materials

Long-term demand for health and protection products is an important megatrend
underpinning the Group's strategy in Health & Protection. The Group is a
world leader in NBR, which the Group's customers use for glove-dipping, and
the leading NBR producer, by volume, in Europe, which the Group's customers
use in a wide range of end-markets. The Group's NBR products serve a
fast-growing market which is expected to grow at a rate of 6%+ during the
coming years The Group has responded to these market trends through
significant R&D investment to drive innovation of market leading products
with strong intellectual property protection, investment in new low-cost
capacity and efficient capacity utilisation.

In the Health & Protection and Performance Materials division, the Group
continues to work towards strengthening the overall cost competitiveness of
the Group's Malaysian supply chain and to enhancing customer intimacy and the
Group's share of demand globally.

The price of NBR has been volatile over the past three years. Initially,
increased demand for medical gloves drove high prices during the COVID-19
pandemic, which were then followed more recently by historical lows, as a
result of destocking by the Group's end-users and their customers. However,
underlying end customer demand for medical gloves remains similar to
pre-COVID-19 pandemic levels and the market is expected to continue to grow in
the medium-term (including as a result of urbanisation and healthcare in
emerging markets), while the impact of destocking is expected to abate as
end-users and customers make use of their existing inventories at pre-COVID-19
rates.

(iii) Global footprint with balanced geographic exposure and strong customer
relationships

As at 30 June 2023, Synthomer has 36 sites (taking account of announced
closures) across 17 countries in the Americas, EMEA and Asia. It has a
balanced geographic exposure with 48% of revenues for the year ended 31
December 2022 generated in Europe, 19% in Asia, 27% in North America, and 6%
in the rest of the world.

The Group served approximately 6,000 customers across the world in the year
ended 31 December 2022, including many global blue-chip companies. The Group
believes it has strong and long-term customer relationships. The Group's
customer base is widespread and well balanced across geographies and
end-markets. For the year ended 31 December 2022, the Group's largest customer
represented approximately 2% of total revenues while revenues from the Group's
twenty largest customers represented approximately 22% of total revenues. Some
examples of key customers include: 1) with respect to Coatings &
Construction Solutions - PPG Industries, Inc., Sherwin Williams Company, Akzo
Nobel N.V., Sika AG, Proctor & Gamble Company and Haliburton Company; 2)
with respect to Adhesive Solutions - Henkel Ltd, HB Fuller Company, Shurtape
Technologies, LLC, Pirelli & C. S.p.A. and Continental AG; and 3) with
respect to Health & Protection and Performance Materials - Top Glove
Corporation Bhd, Sappi Limited, Honeywell International, Inc., Lanxess AG and
BASF SE.

(iv) Impressive track record and pipeline of new product development through
customer focused R&D

The Group has an impressive track record and pipeline of new product
development through customer focused R&D which supports the Group's growth
potential. The Group maintains four Centres of Excellence as part of an
innovation network comprising sites across the world. The Group's four Centres
of Excellence include sites in Germany and the US, as well as the new industry
leading Asia Innovation Centre established in 2019. For the year ended 31
December 2022, the Group invested £33.7 million in R&D and launched 18
new products. These investments in R&D continue to have a significant
effect on the Group's revenues, with 20% of the Group's sales volume for the
year ended 31 December 2022 derived from products that the Group developed in
the previous five years or with patent protection. Since 2019, the Group has
filed patent applications on 39 new inventions and registered 16 new patents.
The Group is committed to quantifying, improving and communicating the
sustainability of all the Group's activities through Global Reporting
Initiative reporting.

(v) Sustainability embedded in products and a tailwind for future growth

Sustainability is a key trend that will drive demand from Synthomer's
customers. Regulation is driving the requirement for cleaner, more
environmentally friendly solutions, and for renewable raw materials. The
Group's portfolio is positioned to help drive circular solutions (for example,
recyclable packaging) and the Group's high-performance water-based polymers
can displace solvent-borne polymers, leading to further demand for the Group's
products. As a market leader in water-based and emission reducing polymers,
this creates a huge opportunity for Synthomer. The Group is targeting 60% of
its new products to have sustainability benefits by 2030.

Synthomer has a long track record of helping customers towards their own
sustainability goals. The Group's emission-reducing solutions and lower-carbon
intensity operations all make a positive contribution towards customers' Scope
3 carbon footprints. Synthomer's capabilities and products can help customers
in multiple areas, whether that is replacing solvent-based coatings with
water-based alternatives, developing water-based polymers and re-dispersible
powders for construction customers, or innovating bio-based, low-carbon
footprint and circular solutions for adhesives.

(vi) Deliverable medium-term targets supporting shareholder value creation

At Synthomer's Capital Markets Day in October 2022, the Group laid out
financial targets which will drive sustained value for shareholders. These
include:

·       Organic revenue growth: Mid-single-digit through the cycle,
supported by innovation, sustainability and end-market focus;

·       EBITDA margins: 15%+ over the medium-term, delivery of this
will be underpinned by a combination of innovation, a higher mix of speciality
products, cost leadership and operational excellence; and

·    Return on invested capital: Mid-teens over the medium-term, supported
by stronger organic growth, higher margins and the Company's more focused
capital allocation policy.

Strategy

The Group's growth strategy is driven by global megatrends and the Group is
focused on driving sustainable growth through business efficiency, R&D and
capital investment projects.

The Group's strategy is composed of the following key pillars:

(i) Organic growth in attractive end-markets

The Group's core strategic growth markets, comprising coatings, construction,
adhesives, and health and protection, each benefit from robust GDP+ growth
dynamics. These markets are driven by accelerating global megatrends including
accelerating urbanisation, demographic and social change, climate change and
sustainability and shifting economic power. In October 2022, as part of its
new strategy, the Group announced a new divisional organisational structure
aligning the Group's organisation with its core markets. This alignment of
operational segments and end-markets is expected to assist the Group in
anticipating and meeting customers' needs at pace and deliver better products
with improved margin and product differentiation.

Innovation and sustainable products, such as water-based solutions displacing
solvents in the construction, coatings and adhesives markets, are key drivers
of growth across the Group's core markets and developing products through
focused customer-centric R&D is a key component of the Group's strategy.
For the year ended 31 December 2022, 20% of the Group's sales volumes derived
from products that the Group launched in the previous five years. In the year
ended 31 December 2022, the Group launched 18 new products across multiple
application areas.

(ii) Rigorous and consistent portfolio management to build focused, leading
positions

As part of focusing the business, the Group intends to increase the weighting
of speciality chemicals versus base chemicals in the Group's portfolio, create
a more balanced geographic exposure, streamline operational footprint and
apply more rigorous capital allocation across the Group's businesses.

The Group's strategic review in 2022 identified its core markets, which
combine the most attractive growth prospects and where the Group is most
differentiated. The Group will focus its resources on these segments and the
new divisional structure enables differentiated steering in the allocation of
financial and operational resources.

In addition, the Group identified a number of non-core businesses which have
limited synergies with the rest of the Group's identified growth platforms and
which are less attractive areas for the Group to deploy its capital. In line
with its strategy, on 28 February 2023, the Group announced that it completed
the disposal of its Laminates, Films and Coated Fabrics Businesses, which were
identified as non-core businesses through the strategic review. Moving
forward, the Group will continue to assess its strategic position in terms of
disposing of non-core businesses to rationalise the Group's portfolio, reduce
complexity and increase the Group's focus on attractive end-markets and
speciality products.

Over the medium-term, the Group's strategic plan will involve targeted M&A
to grow the business once leverage is restored to the guided range. The Group
will continue to review speciality chemicals acquisition opportunities through
both bolt-on acquisitions and more transformational step-change strategic
transactions in adjacent chemistries and geographies, if the Group identifies
appropriate acquisition targets and believes that the Group has sufficient
balance sheet flexibility to do so at that time.

(iii) Operational and commercial excellence in how the Group runs the business

The Group is focused on continuous improvement across its operations to
advance production efficiency, sales effectiveness and functional excellence
while remaining committed to the Group's sustainability standards. To achieve
these aims, the Group seeks to identify good practice in all areas of the
business and ensure that relevant learnings are disseminated across the
business.

The Group aims to drive profitability through maximising the utilisation of
the Group's assets. To achieve this, the Group focuses on identifying the root
causes of production bottlenecks and finding innovative solutions. For
example, at the Sant Albano site in Italy, the Group has reduced water
extraction by 30% by reconfiguring the borehole management process.

For decades, the Group has been a world leading supplier of sustainable
water-based polymers that avoid the use of solvents and keep harmful volatile
organic compounds out of the atmosphere. The Group has also become a global
innovator in driving the use of water-based technology. Over the last few
years, the Group has worked hard to improve its ESG credentials while
remaining committed to driving efficiency. This can be seen with the launch of
the Group's 2030 Vision, which sets ESG targets for the Group and a roadmap to
achieve them, as well as the creation of the Group's Executive Sustainability
Steering Committee last year.

(iv) Differentiated steering to address the differentiated positions across
the Group's portfolio

The Group's new divisional structure enables differentiated steering of the
allocation of financial and operational resources, including capital
allocation. The Group intends to allocate approximately 75% of capital to the
Coatings & Construction Solutions and Adhesive Solutions divisions and
approximately 25% to the Health & Protection and Performance Materials
division over the medium-term.

(v) Diversity, equity and inclusion and holistic people development

Across all businesses in the Group, the Group's employees drive strategy and
deliver for all stakeholders and the Group continues to develop them to be
prepared for the opportunities and challenges that lie ahead. To support this,
the Group is implementing four strategic employee priorities: (i) promoting
holistic people development; (ii) strengthening its leadership capability;
(iii) embracing Synthomer excellence; and (iv) establishing an innovative
workplace culture.

2.2       CHALLENGING MARKET BACKDROP AND OTHER FACTORS HAVE SIGNIFICANTLY, BUT ONLY TEMPORARILY, WEAKENED RECENT PERFORMANCE

Over the last 18 months, Synthomer has navigated an extremely challenging
market backdrop, during which time a temporary weakness in demand across most
of its end-markets and geographies have significantly affected financial
performance. In 2020 and 2021, the COVID-19 pandemic created exceptional
demand for NBR, used in the manufacture of medical gloves. Since then, as a
result of the elevated inventory levels of medical gloves and new capacity
added during the COVID-19 pandemic, there has been a prolonged and
unprecedented period of oversupply, resulting in far weaker levels of demand
for NBR. The Russian military action in Ukraine contributed further to
economic volatility, with the Company impacted by supply chain disruptions,
sustained higher raw material costs and sharp rises in the cost of energy.
More recently, the high inflation environment and resultant interest rate
rises have slowed industrial activity and led to subdued levels of demand
across most of the Group's end-markets, exacerbated by destocking and
increased competition, including from Asia, in some of Synthomer's base
chemical product ranges. Volumes have also been adversely impacted in the
Adhesive Solutions division by constrained access to raw materials and site
reliability challenges, which the Company is in the process of resolving under
a new divisional leadership team.

As a result of these factors, the Group's earnings have reduced temporarily
but significantly, and combined with the debt taken on to finance the Eastman
Acquisition has resulted in the Group's leverage increasing significantly, to
5.5x covenant net debt, based on EBITDA as at 30 June 2023.

2.3       SUBSTANTIAL AND DECISIVE MANAGEMENT ACTIONS SUCCESSFULLY EXECUTED TO PRESERVE CASH AND MANAGE DEBT IN RESPONSE

The management team and the Board have taken substantial and decisive actions
to strengthen the business and the balance sheet to manage through this
challenging period. Synthomer strengthened its financial liquidity position,
refinancing the Revolving Credit Facility and putting in place the UKEF
Facilities and the Factoring Facilities. The Group extended covenant headroom
in October 2022 and also as part of the Revolving Credit Facility refinancing
in March 2023. As at 30 June 2023, Synthomer had committed and available
liquidity of more than £400 million. The Company also initiated a £150-200
million cash management programme, which included a reduction and
re-prioritisation of capital expenditure, including the downsizing or deferral
of a number of growth opportunities, working capital optimisation and a
suspension of the dividend. The Group also identified approximately £30
million in 'self-help' cost-saving measures on a run-rate basis in 2022, with
approximately £20 million remaining to be delivered during the second half of
2023, including actions within the Adhesive Solutions division. In line with
its portfolio rationalisation strategy, the Company also completed the
disposal of the Laminates, Films and Coated Fabrics Businesses in February
2023, generating total net proceeds of $269 million.

On 5 September 2023, Synthomer entered into the RCF Amendment and Extension to the Revolving Credit Facility with the RCF Lenders, which is subject to and conditional upon, among other things, the Company's receipt of the proceeds from the Rights Issue. If effective, the RCF Amendment and Extension will, amongst other matters, reduce the total commitments under the Revolving Credit Facility from $480 million to $400 million, and extend the maturity date from 31 May 2025 to 31 July 2027.
2.4       EARNINGS POWER OF THE GROUP IS MORE THAN DOUBLE CURRENT LEVELS IN THE MEDIUM-TERM

The Group generated £158 million of EBITDA in the 12 months to June 2023 from
continuing operations. This reflects reduced industrial demand, destocking,
medical glove oversupply and the reliability issues relating to the Adhesive
Resins Business. The Board believes that the earnings power of the Group is
more than double current levels based on a combination of executing its
near-term management actions, end-market volume recovery, and delivery of the
Group's strategy. Near-term actions include approximately £20 million in
self-help cost savings, whilst end-market recovery has the potential to
generate more than £100 million in additional EBITDA across the business, as
outlined below.

While Coatings & Construction Solutions has seen encouraging progress in
the first half of 2023, led by the speciality products within its portfolio,
the Group expects further recovery potential. The division generated average
EBITDA of approximately £110 million per annum in 2021 and 2022. This
compares to LTM EBITDA of £96 million for the period ending 30 June 2023. The
Group anticipates a full recovery as demand in the division's end-markets
recovers and the destocking cycle abates.

The Adhesive Resins Business acquired from Eastman, which makes up the
majority of the Adhesive Solutions division, generated EBITDA of approximately
£71 million in the 12 months to June 2021. Factoring in a further
approximately £24 million of EBITDA from legacy Synthomer businesses that now
form part of the division, the Adhesive Solutions division generated EBITDA of
approximately £95 million in LTM June 2021, before the identified run-rate
acquisition costs synergies of approximately £23 million per annum
(approximately £118 million in total). This compares to LTM EBITDA of £48
million for the period ending 30 June 2023. Synthomer is highly confident that
the performance of the acquired Eastman business will improve towards these
levels, as demand recovers and destocking ends, supported by the Group's
performance improvement plan and other self-help actions (including the
executed synergy actions). The Group also continues to make investments in
capacity and other growth opportunities in certain key speciality products,
such as the recently announced expansion of speciality amorphous polyolefins
in North America, which are also expected to drive growth.

Synthomer's NBR business, which is part of the Health & Protection and
Performance Materials division, operates in a market where underlying end-use
volume growth rates are consistent with pre-COVID-19 pandemic levels,
supported by rising hygiene standards and increasing access to healthcare in
emerging markets where the current medical glove consumption base is low.
However, production levels have been exceptionally low due to elevated stock
built up during the COVID-19 pandemic, as well oversupply in the market as a
result of new capacity introduced in response to unprecedented demand. Prior
to the COVID-19 pandemic, the NBR business in 2018 and 2019 generated average
EBITDA of approximately £70 million per annum compared to LTM EBITDA of £5
million for the period ending 30 June 2023. The Group has announced plans to
reduce its own NBR capacity (by approximately 20%) by consolidating production
and closing a legacy plant and notes that other participants in the market
have also begun to adjust capacity in response to current market conditions,
with the current oversupply situation therefore expected to resolve over time.
Synthomer is confident in recovery over time towards levels achieved
pre-COVID-19 pandemic as the medical glove oversupply normalises, demand
growth continues supported by the hygiene megatrend and the supply side adjust
to post-COVID-19 pandemic conditions.

While visibility remains low, the Board believes Group volumes reached a
cyclical trough in the first half of 2023, and the Board does not expect
further demand deterioration in key end-markets in the second half of the
year.

3.         STRONGER FOUNDATIONS, SUPPORTED BY VOLUME RECOVERY, WILL UNDERPIN DELIVERY OF THE GROUP'S MEDIUM-TERM AMBITIONS

The Board believes that a reduction in Synthomer's current elevated leverage
position will enable the Group to increase focus on strategic execution and
long-term value creation in addition to short-term cash preservation as well
as reducing the downside risks from near-term macroeconomic uncertainty for
all stakeholders. This will also ensure that the Company is well-positioned to
deliver its strategy and medium-term ambitions for profitable growth as demand
recovers. It is accordingly announcing a fully underwritten rights issue to
raise total proceeds of £276 million, with an irrevocable commitment received
from KLK to subscribe for their pro-rata entitlements in full. This will
increase covenant headroom and strategic and financial flexibility, resulting
in a pro forma reduction in the covenant net debt based on EBITDA ratio from
5.5x to 3.8x as at 30 June 2023. Reducing leverage further towards the 1-2x
target range by the end of 2024 remains a key priority. This will be supported
by further divestment proceeds and earnings power more than doubling over the
medium-term through continued cost control, volume recovery and strategic
delivery.

In summary, the Board believes the Rights Issue will allow the Company to
focus its resources on strategic execution and long-term value creation for
shareholders from its platforms of leading businesses in attractive growth
segments.

4.         USE OF PROCEEDS

The Rights Issue is expected to raise approximately £276 million in gross
proceeds and approximately £261 million in net proceeds (after deduction of
estimated commissions, fees and expenses). The net proceeds will initially be
utilised to reduce borrowings under the Revolving Credit Facility and provide
flexibility to deliver the Group's strategy and manage balance sheet leverage.
The Rights Issue will result in a pro forma reduction in the covenant net debt
based on EBITDA ratio from 5.5x to 3.8x as at 30 June 2023.

5.         CURRENT TRADING AND OUTLOOK

Trading in July and August was similar to the 2023 Half Year Results, with
limited visibility and subdued volumes given challenging macro conditions. The
Group's outlook for the remainder of 2023 provided in July is reiterated: the
Board does not anticipate a material recovery in customer demand before the
end of the current year. However, the Board anticipates approximately £20
million in self-help measures to be delivered mainly in the second half of
2023. Overall, the Group remains confident of making sequential progress in
the second half relative to the first.

The Group continues to take decisive action to strengthen its business so that
it is positioned for profitable growth when demand does begin to recover. As
stated elsewhere, through the Group's near-term actions, end market volume
recovery (which alone has the potential to improve Group EBITDA by more than
£100 million over time) and execution of the strategy, the Board believes the
Group's medium-term earnings power is more than double the £158 million of
continuing EBITDA generated over the year to the end of June 2023. Reducing
leverage further toward the 1-2x target range remains a key priority. Overall,
the Board remains confident in the Group's ability to deliver the medium-term
targets set out last October, which were mid-single-digit growth in constant
currency over the cycle, EBITDA margins above 15% and mid-teens return on
invested capital.

6.         RISK FACTORS AND FURTHER INFORMATION

Shareholders should consider fully and carefully the risk factors associated
with Synthomer, as set out in the Prospectus.

Shareholders should read the whole of the Prospectus and not rely solely on
the information set out in this announcement.

7.         DIVIDENDS AND DIVIDEND POLICY

In October 2022, as part of a covenant amendment process with the Group's
banking syndicates to give the Group increased headroom, Synthomer suspended
dividend payments, including the interim dividend of 4p announced on 12
October 2022 that was due to be paid in November 2022.

Whilst the Company will continue to prioritise reducing leverage towards its
1-2x target range by the end of 2024 and execution of strategy, including
sustainability commitments and predominantly organic-led growth in the
near-term, it recognises the importance of dividends for Shareholders and
therefore will look to reinstate a dividend when appropriate to do so.

8.         CAPITAL REORGANISATION

The Capital Reorganisation, comprised of the Sub-division and the Share
Consolidation, is proposed in order to achieve a higher market price for the
Consolidated Ordinary Shares and, accordingly, a more appropriate Rights Issue
Price.

Under the Capital Reorganisation:

·      each Existing Ordinary Share of 10 pence nominal value will be
subdivided and converted into one Intermediate Share of 0.05 pence nominal
value and 1 Deferred Share of 9.95 pence nominal value; and

·      immediately thereafter, every 20 Intermediate Shares of 0.05
pence nominal value will be consolidated into 1 Consolidated Ordinary Share of
1 pence nominal value.

The Existing Ordinary Shares will be consolidated such that Shareholders will
receive Consolidated Ordinary Shares on the Consolidation Ratio of 1
Consolidated Ordinary Share in substitution for every 20 Existing Ordinary
Shares. Following Consolidation, the Consolidated Ordinary Shares will have
the same rights as the Existing Ordinary Shares, including voting, dividend
and other rights.

The purpose of the Deferred Shares is solely to facilitate the reduction in
the nominal value of the Shares to 1 pence. The Deferred Shares will be
effectively valueless as they will carry very limited rights, including no
voting or dividend rights. The Company has the right to acquire and then
cancel the Deferred Shares for an aggregate price of £0.01 and intends to
exercise this right immediately following the creation of the Deferred Shares.
Further information on the Deferred Shares will be set out in the Prospectus.

Immediately following the implementation of the Capital Reorganisation, the
market price of a Consolidated Ordinary Share should be approximately equal to
a multiple of 20 times the market price of an Existing Ordinary Share
immediately beforehand. The Consolidation Ratio used for the Share
Consolidation has been set by the Directors after consultation with the
Underwriters. Existing Shareholders will own the same proportion of the
Company as they did immediately prior to the implementation of the Share
Consolidation, subject only to fractional rounding.

The Closing Price of each Existing Ordinary Share on 6 September 2023 (being
the last Business Day prior to the date of the Prospectus) was 60.8 pence (as
derived from the Daily Official List of London Stock Exchange plc). In
accordance with the Consolidation Ratio, the Consolidated Closing Price of
each Consolidated Ordinary Share would have been 1,216 pence on that date.

The Capital Reorganisation, if approved by Shareholders, will be made by
reference to holdings of Existing Ordinary Shares on the Company's register of
members as at 6.00 p.m. on 25 September 2023 (or such other time or date as
the Directors may determine). Holdings of Existing Ordinary Shares in
certificated and uncertificated form will be treated as separate holdings
for the purpose of calculating entitlements under the Rights Issue. Fractions
of New Ordinary Shares will not be allotted to Qualifying Shareholders and
fractional entitlements will be rounded down to the nearest whole number of
New Ordinary Shares.

Any fractional entitlements to Consolidated Ordinary Shares which arise will
be aggregated into whole Consolidated Ordinary Shares and sold in the market
on behalf of the relevant Shareholders. The total proceeds of the sale (net of
related expenses (including any applicable brokerage fees and commissions and
amounts in respect of related irrecoverable VAT)) will be paid in due
proportion to each of the relevant Shareholders. Any proceeds of sale (net of
related expenses (including any applicable brokerage fees and commissions and
amounts in respect of related irrecoverable VAT)) to each of the relevant
Shareholder(s) of less than £5.00 will be aggregated and will accrue for the
benefit of the Company.

It is expected that dealings in the Existing Ordinary Shares will continue
until close of business on 25 September 2023 and admission of the Consolidated
Ordinary Shares to the premium listing segment of the Official List and to
trading on the London Stock Exchange's main market for listed securities will
become effective at 8.00 a.m. on 26 September 2023.

If you hold Existing Ordinary Shares in certificated form, you will be issued
with a new share certificate in respect of your Consolidated Ordinary Shares
following the issue of Consolidated Ordinary Shares.

With effect from Admission, share certificates in respect of Existing
Ordinary Shares will cease to be valid. Share certificates in respect of
Consolidated Ordinary Shares will only be issued following the Share
Consolidation. It is therefore important that, if you hold certificate(s) in
respect of your Existing Ordinary Shares, you retain them for the time being
until share certificates in respect of Consolidated Ordinary Shares are
despatched, which is expected to be within 10 Business Days of Admission. On
receipt of share certificates in respect of Consolidated Ordinary Shares,
certificates in respect of Existing Ordinary Shares can be destroyed.

If you currently hold Existing Ordinary Shares in uncertificated form, it is
currently expected that the Existing Ordinary Shares under ISIN GB0009887422
will be disabled by 6.00 p.m. on the day before Admission (which such date is
currently expected to be 25 September 2023) and on or soon after 8.00 a.m. on
Admission (which is currently expected to be 26 September 2023) your CREST
account will be credited with Consolidated Ordinary Shares under ISIN
GB00BNTVWJ75. Your CREST account will also be credited with the New Ordinary
Shares (nil paid) under the Rights Issue. The ISIN for the New Ordinary Shares
will be that of the Consolidated Ordinary Shares.

Temporary documents of title will not be issued in respect of Consolidated
Ordinary Shares and, pending despatch of definitive share certificates,
transfers of Consolidated Ordinary Shares held in certificated form will be
certified against the register of members.

All share certificates will be sent by first class post, at the risk of the
Shareholder(s) entitled thereto, to the registered address of the relevant
Shareholder (or, in the case of joint Shareholders, to the address of the
joint Shareholder whose name stands first in the register of members in
respect of such joint shareholding).

9.         PRINCIPAL TERMS AND CONDITIONS OF THE RIGHTS ISSUE
9.1       OVERVIEW

Synthomer proposes to raise gross proceeds of approximately £276 million
(approximately £261 million after deduction of estimated commissions, fees
and expenses) by way of the Rights Issue.

(A)        PRICING

Taking into account the Capital Reorganisation, the Rights Issue Price
represents a discount of 83.8% to the Consolidated Closing Price on 6
September 2023 (being the latest practicable date prior to the date of this
announcement), and a discount of 42.5% to the theoretical ex-rights price of
343 pence per Existing Ordinary Share calculated by reference to the
Consolidated Closing Price on the same basis. Upon completion of the Capital
Reorganisation and the Rights Issue, the New Ordinary Shares will represent
approximately 600% of the Company's Consolidated Ordinary Shares that will be
in issue immediately following the Share Consolidation and approximately 85.7%
of the Company's enlarged issued share capital following the Capital
Reorganisation and the Rights Issue.

The Rights Issue Price has been set, following discussions with major
Shareholders, at the level which the Board considers necessary to ensure the
success of the Rights Issue, taking into account the aggregate proceeds to be
raised. The Board believes that the Rights Issue Price, and the discount which
it represents, is appropriate.

(B)        DILUTION

The Rights Issue will result in 140,200,818 New Ordinary Shares being issued
and, taking into account the Capital Reorganisation, the number of Ordinary
Shares being increased by approximately 600%.

If a Qualifying Shareholder does not (or is not permitted to) take up any New
Ordinary Shares under the Rights Issue, such Qualifying Shareholder's
shareholding in Synthomer will be diluted by 85.7% as a result of the Rights
Issue.

For the purposes of calculating: (i) the number of New Ordinary Shares to be
issued pursuant to the Rights Issue; (ii) the specified increases to the
Company's issued share capital resulting from the Rights Issue; and (iii) the
specified dilutive effect of the Rights Issue, the issuance of any Ordinary
Shares in respect of the vesting or exercise of any awards under the Share
Plans which may occur between the Latest Practicable Date and the Record Date
has been disregarded.

9.2       KEY TERMS

On and subject to, among other things, the terms and conditions described in
the Prospectus, and taking into account the Capital Reorganisation,
140,200,818 New Ordinary Shares will be offered by way of rights at the Rights
Issue Price of 197 pence per New Ordinary Share to Qualifying Shareholders on
the basis of:

6 New Ordinary Shares for every 1 Consolidated Ordinary Share
this is equivalent to
6 New Ordinary Shares at 197 pence each for every 20 Existing Ordinary Shares

held and registered in their name on the Record Date (and so in proportion for
the number of Existing Ordinary Shares then held, subject to fractional
entitlements).

Qualifying Non-CREST Shareholders with registered addresses in the United
States or in any of the other Excluded Territories will not be sent
Provisional Allotment Letters and will not have their CREST stock accounts
credited with Nil Paid Rights, except where the Company and the Underwriters
are satisfied that such action would not result in the contravention of any
registration or other legal or regulatory requirement in such jurisdiction.

Entitlements to New Ordinary Shares under the Rights Issue will be rounded
down to the nearest whole number and fractions of New Ordinary Shares will not
be provisionally allotted to Qualifying Shareholders. Holdings of Existing
Ordinary Shares in certificated and uncertificated form will be treated as
separate holdings for the purpose of calculating entitlements under the Rights
Issue.

Any fractional entitlements to New Ordinary Shares which arise will be
aggregated into whole New Ordinary Shares and sold in the market on behalf of
the relevant Shareholders. The total proceeds of the sale (net of related
expenses (including any applicable brokerage fees and commissions and amounts
in respect of related irrecoverable VAT)) will be paid in due proportion to
each of the relevant Shareholders. Any proceeds of sale (net of related
expenses (including any applicable brokerage fees and commissions and amounts
in respect of related irrecoverable VAT)) to each of the relevant
Shareholder(s) of less than £5.00 will be aggregated and will accrue for the
benefit of the Company.

The Rights Issue has been fully underwritten by (in respect of the Non-KLK
Rights Issue Shares) the Underwriters and (in respect of the KLK Rights Issue
Shares) KLK. The underwriting from the Underwriters is in accordance with the
terms and subject to the conditions of the Underwriting Agreement, and the
underwriting from KLK is in accordance with the terms and subject to the
conditions of the KLK Undertakings.

The Rights Issue is conditional upon (among other things): (i) the passing of
the Resolutions at the General Meeting without material amendment; (ii) the
Underwriting Agreement having become unconditional in all respects (save for
the condition relating to Admission of the Nil Paid Rights); and (iii)
Admission of the Nil Paid Rights becoming effective by not later than 8.00
a.m. on 28 September 2023 (or such later date as the Company and the
Underwriters may agree).

Application will be made to the FCA for the New Ordinary Shares (nil and fully
paid) to be admitted to listing on the premium listing segment of the Official
List and to the London Stock Exchange for the New Ordinary Shares (nil and
fully paid) to be admitted to trading on its main market for listed
securities. It is expected that Admission of the Nil Paid Rights will become
effective, and that dealings in the New Ordinary Shares, nil paid, on the
London Stock Exchange's main market for listed securities will commence, at
8:00 a.m. on 28 September 2023. It is also expected that Admission of the New
Ordinary Shares (fully paid) will become effective, and dealings in New
Ordinary Shares, fully paid, on the London Stock Exchange's main market for
listed securities will commence, at 8:00 a.m. on 13 October 2023.

The New Ordinary Shares will, when issued and fully paid, rank pari passu in
all respects with, and will carry the same voting and dividend rights as, the
Consolidated Ordinary Shares.

Overseas Shareholders, including Shareholders resident in the United States
should refer to the Prospectus for further information regarding their ability
to participate in the Rights Issue.

10.       RELATED PARTY TRANSACTIONS

KLK is a related party of the Company for the purposes of the Listing Rules as
it is a substantial shareholder of the Company which is entitled to exercise,
or control the exercise of, 10% or more of the votes that are able to be cast
at general meetings of the Company.

Pursuant to the KLK Undertakings and the Rights Issue, KLK has irrevocably
committed to take up its entitlement pursuant to the Rights Issue in full and
to vote in favour of the Resolutions. This will result in KLK acquiring an
aggregate of 37,676,850 New Ordinary Shares, representing approximately 26.9%
of the New Ordinary Shares to be issued pursuant to the Rights Issue. This
transaction is classified as a smaller related party transaction under
LR11.1.10R(1) and is therefore disclosed in accordance with LR11.1.10R(2)(C).

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  ARIFDLBBXKLFBBX