UK-based polymer products maker Low & Bonar on Thursday warned of tough trading conditions in the third quarter and said that it would not be able to comply with its financial agreements if they were tested in May.
Low & Bonar said it had talked with its lenders as a result of trading challenges, deterioration in outlook and lesser flexibility in managing supplier credit terms.
Changes to financial agreements were completed and financial deals, which were due to be tested at the end of November, were waived to help the company move ahead with its turnaround plan and takeover by FV Beteiligungs-GmbH.
The company, which sources polymers and makes them into yarns, fibres and coated fabrics used in roofing, building and also automobiles, has been working to simplify its portfolio and structure while working to improve operational performance.
If the takeover offer from FV Beteiligungs-GmbH were to lapse before or after Nov. 30, the agreements would be reinstated and tested, Low & Bonar said, adding that there is a significant risk that should the financial covenants be tested, the company would not be able to comply.
Philip de Klerk left the company as chief executive in May as it issued a second profit warning in two months. De Klerk’s departure was the latest upheaval for the company, which has been in the red for the past two years after being hit by a range of problems, including more recently the U.S.-China trade dispute.
Low & Bonar said the trade wars had hurt Chinese customers of its unit that makes synthetic non-woven fabrics, with year to date Asia Pacific sales behind a year earlier.
The company, founded as a small textile company in 1903, has also warned of softness in the European automotive market.
FV Beteiligungs-GmbH, a unit of German technology group Freudenberg SE, offered to buy Low & Bonar in September, valuing the company at about 107.0 million pounds ($130.89 million). ($1 = 0.8175 pounds)
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