Synthomer - comment

Press reports that Lenders have appointed FTI as advisors is a logical next step, and we expect the noteholders to do the same. We are retaining our short for now, but are keeping an eye on developments in case a proposed rescheduling of debts leads to a short squeeze. The lenders will not want to extend beyond the May 2029 note maturities (without a springing maturity clause). The bank loans are 80% government guaranteed, so some deal to extend them should be possible. We expect that a reduction in the RCF from £300m to a much smaller figure will be the quid pro quo for any deal. The existing RCF is sized for acquisitions, which are unlikely now. A rights issue is a possibility, but with a market cap of only £40m, an equity raise would be highly dilutive if it were to raise a worthwhile amount of cash.