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The Lenzing Group aims to continue its quest to be green—and investors took note.
The Austria-based fiber supplier announced Sept. 27 that its Brazilian joint venture, LD Celulose S.A. (LDC), has raised $650 million through the sale of green notes—better known as green bonds.
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The bonds, purchased by institutional investors, are slated to mature in January 2032 with a 7.95-percent per-annum interest rate. That means that the subsidiary will repay its investors in 2032, and they will receive an annual interest rate worth nearly 8 percent on their investment. So, for instance, if an investor purchased $1 million worth of the green notes, they would receive $79,500 each year until 2032, when they receive their initial investment back from LDC.
The notes will be listed on the Singapore stock exchange.
According to Lenzing, the notes were in high demand throughout the investor landscape, receiving so much interest that the sale was “oversubscribed by 4.6 times.”
Rohit Aggarwal, CEO of the Lenzing Group, said he believes the excitement from investors comes partly as a result of the company’s holistic sustainability strategy. Lenzing’s latest sustainability report showed that it has achieved and exceeded its goal of 100 percent green electricity for four of its sites by 2024. The company also noted that it has set new greenhouse gas emissions reduction targets, endorsed by the Science-Based Target Initiative (SBTi).
“The Lenzing Group has been a pioneer in the sustainable textile and nonwovens industry and the production of dissolving wood pulp for decades and has a clear plan to further green its production,” Aggarwal said in a statement. “The investors’ interest for LDC’s green notes is also a result of our sustainability efforts.”
LDC was officially announced in late 2019, and the project got underway in 2022; it is a dissolving wood pulp plant based just outside of Sao Paulo, Brazil. Wooden board producer Dexco, at the time known as Duratex, is Lenzing’s partner on the project. Lenzing owns 51 percent of the venture, and Dexco owns the other 49 percent.
In 2019, Lenzing said the project would entail an investment of about $1.3 billion and that the companies would finance it through long-term debt. This week’s announcement stated that, in addition to the funds raised for the green notes, the company had received a syndicated term loan worth $350 million, bringing the total value of the newly raised funding to $1 billion. The loan in combination with the sale of the green notes will enable Lenzing to change the financing structure of LDC.