On 14th September 2022, Masterplast Nyrt. (hereafter, “Masterplast”) announced it has entered into an options contract for a right (but not an obligation) to purchase an additional 76% ownership of T-CELL Plasztik Kft., which if exercised, would then make Masterplast the 100% owner of T-CELL Plasztik Kft. Masterplast currently owns a minority stake (24%) in T-CELL Plasztik Kft. The option lasts for three years, from the publication of the audited financial statements of T-CELL Plasztik Kft., for the year 2022, so potentially up until 31st May 2026. The purchase price is based on the average EBITDA of T-CELL Kft. for the two preceding financial years, multiplied by five. T-CELL Plasztik Kft., had net sales revenue of HUF 3.2bn and an EBITDA of HUF 0.4bn in 2021.

On 20th September 2022, Masterplast announced its intention to perform a Secondary Public Offering (SPO), placed by public sale on the Budapest Stock Exchange, in Q4 2022. The company plans to raise HUF 8-10bn (EUR 20m - 25m) through the SPO, of which the proceeds will be earmarked for capital expenditure, as the company plans to enter the mineral wool insulation market. As of 29th September, the company has a market capitalisation of HUF 61.41bn (EUR 145.7m).

The company is looking to invest in two new mineral wool facilities. The first facility in Sremska Mitrovica, Serbia will be used to manufacture rock wool, will require an investment of EUR 20m – 25m, and is expected to start production in Q1 2024. The second facility, with no confirmed location yet, will be used to manufacture glass wool, will require an investment of EUR 25m and is expected to start production in Q1 2025.

The SPO forms a key part of the group’s strategy over the next 3 years. The two new facilities will allow Masterplast to broaden its offering, and also benefit from the higher margin associated with mineral wool insulation material.

Scope believes that the new announced transactions will not affect the company’s current credit rating (issuer rating: BB-/Stable; senior unsecured debt rating: BB-), reviewed in August 2022. In addition, Scope believes these new investments will help the business to achieve additional revenue growth and will allow the company to benefit from an improvement in economies of scale and better operational efficiency. In addition, Scope supports the view that the insulation materials market has become more prevalent in the energy crisis.

This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com.