UK-headquartered polymers firm Synthomer plc has announced that it has entered into a trade receivables purchasing arrangement with Rainbow State Limited, a subsidiary of its largest shareholder Kuala Lumpur Kepong Berhad Group (KLK).
The company has put this temporary arrangement in place with the support of KLK to provide additional short-term financial flexibility and ensure a prudent level of banking covenant headroom at year end.
Under the arrangement, the company and KLK have agreed that KLK will purchase c.£50 million of company trade receivables due on or before 28 February 2026, which are not eligible for inclusion in the company’s existing committed EUR200 million non-recourse receivables financing facility. It is anticipated that receivables purchased under the arrangement and in the existing committed receivables financing facility together will not exceed EUR200 million.
The purchasing arrangement terms have been agreed on an arms-length basis and are consistent with terms available from third party market participants for an arrangement of this nature.
By virtue of KLK and its connected parties with 27% shareholding in Synthomer, KLK is considered a related party of Synthomer under the UK Listing Rules.
The board of Synthomer (excluding Dato’ Lee Hau Hian and Uwe Halder by reason of their relationship with KLK) considers that the purchasing arrangement is fair and reasonable as far as Synthomer shareholders are concerned, and have been so advised by Rothschild & Co acting in its capacity as sponsor in relation to this related party transaction.