Shares in the polymer group Synthomer (LSE:SYNT) PLC lost around a quarter of their value after the company announced a £276 million cash call designed to rapidly reduce its debt pile.
The new funding will come via a rights issue where existing investors will be asked to buy six new shares at 197p each for every one they currently own.
The rights issue will be followed by a share consolidation whereby shareholders will receive one new share with a nominal value of 1p for every 20 existing shares with a 10p nominal value.
Synthomer (LSE:SYNT) said it had been hit by a temporary reduction in earnings, so its leverage (which measures the company's ability to cover its debt from earnings) rose to 5.5 times EBITDA. That figure will fall to a presumably more manageable 3.8 times following the cash call.
It took out the loans to fund a number of key acquisitions, including the US$1bn purchase of the Eastman adhesive resins business completed last year.
At 8.22 am, the shares were changing hands for 44.96p, down 15.8p.