Pfleiderer secures financing, considers rights issue

Wood panel manufacturer Pfleiderer AG has secured €800m long-term financing with 30 banks and hinted that it is looking at a rights issue to reduce debt.

The German company had been talking to banks after releasing a profits warning last June in which it said it may not fulfill existing credit agreements.

The finance package agreed is available until the end of 2013 and features a loan of €140m from the German KfW banking group.

Pfleiderer said there was “never any doubt” about financing itself but about related costs, which are to rise by a small amount.

“For 2010, no credit clause has been agreed upon which refers to the ratio between operating profits and net debt,” it said. “For the following three years, such a covenant has been specified but with the required leeway.”

The company plans to reduce net debt by more than €350m in the next four years, resulting in lower interest rates and increased profitability. It said raising new equity was now once again an option for reducing debt, “when the time is right for such a move”.

Pfleiderer also anticipates significantly reduced investment spending and is benefiting from past high levels of investment in its plants, which should lead to organic growth.