Lenzing AG, an Austrian maker of viscose fibers, will sell about 500 million euros ($684 million) of shares by late April in a public offering of new and existing stock, according to two people with knowledge of the sale.
The deal will help fund a 1.5 billion-euro investment to build new plants and expand existing facilities in Austria, China, India and Indonesia over the next four years, said the people, who declined to be identified because the process is confidential. B&C Industrieholding GmbH, which owns 90.5 percent of the company, will also sell some of its stock, they said.
Lenzing, based in the Upper Austria town of the same name, is seeking to increase production capacity as rising cotton prices boost demand for substitute fibers. The company will probably select Morgan Stanley, UniCredit SpA and Deutsche Bank AG as bookrunners, the people said.
Spokesmen for all three banks declined to comment when contacted by Bloomberg News. Angelika Guldt, a spokeswoman for Lenzing, also declined to comment. Chief Executive Officer Peter Untersperger told reporters yesterday that the company was “keeping all options open” on the timing and volume of any share sale.
Lenzing fell 1.5 percent to 87 euros in Vienna, valuing the company at 2.24 billion euros.
Viscose fibers, made from wood and used in textiles and fabrics such as baby wipes, are increasingly used in emerging economies such as China and India in place of cotton, whose price has doubled in the past five months as demand outpaces supply. Lenzing’s shares jumped 75 percent over the same period, while revenue and operating profit tripled in the past 10 years.
The company’s competitors include Jacksonville, Florida-based Rayonier Inc., India’s Grasim Industries Ltd. and Hong Kong-listed Sateri Holdings Ltd., according to data compiled by Bloomberg.
B&C’s dominant stake in Lenzing has curbed the stock’s liquidity and reduced its weighting in stock indexes, limiting investment by others. Only 54 million euros of the stock was traded in 2010, according to data from Vienna’s bourse.
A 500 million-euro share sale would raise Lenzing’s free float to more than 700 million euros and qualify it for membership on the bourse’s main ATX index, a goal identified by Untersperger in a Jan. 13 interview with newspaper Die Presse.
The company, founded in Nazi-occupied Austria in 1938, was taken over by a group of Austrian banks after World War II. In 2000, the principal owner, a precursor to UniCredit Bank Austria AG, endowed its industrial holdings to a charity, whose investment vehicle B&C also owns stakes in Austrian rubber maker Semperit AG and builder Allgemeine Baugesellschaft Porr AG.
Lenzing holders approved a seven-for-one share split in November to attract retail investors, and gave management permission to issue new shares amounting to as much as 50 percent of its outstanding stock.
Lenzing’s net income more than doubled last year to 159 million euros as sales rose 45 percent. The company has forecast a 15 percent to 20 percent increase in revenue this year.