Synthomer - comment
We think the equity raise is being pushed on Synthomer by its banks. Synthomer required a receivables loan from its main shareholder to ensure covenant compliance in December 2025, and our analysis suggests that 2026 will be challenging. Raising £90m (the figure mentioned in the press) at today’s price of 30p would dilute existing shareholders to 35% of the business (at the pre-announcement level, the dilution is still 50%). KLK, the largest shareholder, could underwrite the issuance, but it will want to avoid being forced into a full takeover and will seek an exemption. Our thesis about the problems at Synthomer has proven correct, but the hope of an equity bailout means our short is now a couple of points offside. We will review our position.