Fri 05/19/2023 11:13 AM
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Hedge funds have bought small pieces of Netherlands-based chemicals maker IGM Resins €325 million term loan due July 2025 after it fell about 10 points since the beginning of May to the mid 50s, according to Solve Advisors.

The company’s EBITDA for the full year 2022 was €36 million, down from €48 million a year earlier, according to Moody’s, and it faced a difficult first quarter as well, due to significant destocking by customers, while IGM continued to struggle with high input costs that it was unable to pass through. It had also fixed its energy costs at a high level last year, which meant it has been unable to benefit from falling prices. As a result it barely broke even in terms of EBITDA, which was 80% below budget during the first quarter.

Its net leverage was 9x at the end of January but increased to 13x at the end of the first quarter versus 10x budgeted, according to sources.

The company was able to extend the maturity of its €50 million RCF to December 2024 and secured a covenant waiver that will cover the next three quarters, according to S&P. Afterwards, the RCF will be subject to a springing 7.7x senior secured net leverage covenant, according to Moody’s and the company is subject to a minimum liquidity conditions during the covenant holiday period.

Sources said as of the end of the first quarter, the company’s RCF was fully drawn, but the company still had close to around €50 million of cash.

Investors and advisors are monitoring the company as its financial performance is struggling to recover ahead of its 2024 and 2025 maturities. Its EBITDA has been under pressure due to production delays at a plant in China, as reported.

IGM Resins makes chemicals used in ultraviolet radiation-cure coatings, inks and adhesives, which dry under UV light. It has production plants in China, Italy and the U.S. The company was acquired by Astorg in 2018.

According to Reorg’s CLO database, IGM Resins are held by the following managers. Click HERE to see the holders in the database:



EMEA Covenants can analyze IGM's loan documentation on demand. To speak to our legal analysts please email us HERE.

--Aurelia Seidlhofer, Farooq Baloch, Luca Rossi
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