Mativ Holdings amends credit agreement, adjusts financial covenants

Mativ Holdings, Inc. (NYSE:MATV), a paper mills company with a market capitalization of $624 million, has revised its multicurrency credit agreement, increasing rates and adjusting financial covenants.

The Eighth Amendment to the $1.793 billion credit facility, originally dated September 25, 2018, now includes a higher applicable rate margin and letter of credit fees, among other changes.

The company maintains strong liquidity with a current ratio of 2.37 and has achieved a perfect Piotroski Score of 9, indicating robust financial health. According to InvestingPro analysis, the stock appears undervalued at its current trading price of $11.48, near its 52-week low of $10.78.

Effective Monday, the amended agreement stipulates a 2.75% rate margin for certain loans and a 0.45% commitment fee rate when the net debt to EBITDA ratio is 5.00 to 1.00 or higher.

Moreover, the company is now allowed to borrow up to $504 million in Sterling under the revolving commitments. With an EBITDA of $187.5 million in the last twelve months and a track record of maintaining dividend payments for 29 consecutive years, Mativ demonstrates consistent financial performance despite current challenges.

Mativ is obligated to maintain a minimum interest coverage ratio of 2.50 to 1.00 until December 31, 2025, after which it will increase to 2.75 to 1.00. The maximum net debt to EBITDA ratio is set at 5.50 to 1.00 for the same period, reducing to 5.25 to 1.00 thereafter.

In a separate board development, John D. Rogers (NYSE:ROG), PhD, has decided not to seek re-election at the 2025 annual meeting of stockholders. He will continue to serve as a director and Chair of the Audit Committee until his term ends.

These strategic financial adjustments come as Mativ navigates its fiscal responsibilities, ensuring compliance with revised ratios and covenants. The full details of the Amended Credit Agreement are available in the attached Exhibit 10.1 of the Form 8-K filed with the SEC.

For deeper insights into Mativ's financial health and detailed analysis, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes additional financial metrics and expert analysis among its 12+ key insights for this stock.

This report is based on information contained in a recent SEC filing by Mativ Holdings, Inc.

In other recent news, Mativ reported a slight increase in sales and a substantial rise in adjusted EBITDA in their third-quarter earnings call for 2024.

The company's organic sales grew by 1%, reaching total sales of $498.5 million, while adjusted EBITDA saw a 10% increase to $60.8 million. Despite facing challenges in the advanced films sector, Mativ is optimistic about growth opportunities, particularly in North America, and is actively working towards reducing its net debt, which currently stands at $981 million.

In the same earnings call, Mativ revealed plans for strategic investments in new product lines and a focus on cost reductions and operational improvements. The company anticipates these new products to generate significant incremental revenue. However, it expects a low double-digit decrease in adjusted EBITDA due to challenges in the advanced films segment.

These are among the recent developments for Mativ, which also includes the closure of nonstrategic sites in the Netherlands and Massachusetts, impacting revenue by $50 million.

Looking ahead, the company is targeting a debt leverage ratio of 2.5x to 3.5x, with full achievement expected by 2026. The next earnings call is scheduled for February 2025, where further updates on the company's progress will be provided.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.