Mutares Bets on Buybacks and Divestitures to Regain Covenant Compliance by June

The Munich-based holding company Mutares has posted its first positive quarterly EBITDA in over a year, but the relief is tempered by a tight deadline to fix a broken bond covenant. Operational momentum is building, yet the real test lies in whether management can deliver the asset sales needed to repair the balance sheet before the end of June.

Operational turn gives room to manoeuvre

First?quarter 2026 revenues climbed 10% to €1.6787 billion from €1.5262 billion a year earlier, driven by a string of recent acquisitions. The adjusted EBITDA swung to a profit of €11.1 million, reversing a loss of €30.1 million in the same period of 2025. Particularly striking was the Infrastructure & Defence segment, where revenue jumped to €455 million from €392 million, underscoring the group’s exposure to two of the most active end?markets.

That operational improvement buys Mutares some breathing space, but the big story lies in the financing structure. The company violated a net?debt?to?equity covenant on two of its bonds at the end of last year. Creditors granted a temporary waiver that runs out on 30 June 2026 – leaving just weeks to show concrete progress.

A multi?pronged balance sheet repair

Mutares has launched a voluntary buyback offer for its €250 million floating?rate note, bidding 101% of par plus accrued interest. The maximum repurchase is capped at 10% of the outstanding amount – a modest dent, but a clear signal to bondholders that management is serious about deleveraging. The broader target is to cut total outstanding bonds from €385 million to between €250 million and €300 million. Specifically, the company intends to buy back at least €25 million of its 2023/2027 bond in the current quarter and match that amount in each subsequent quarter.

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Liquidity for these buybacks will have to come from exits. Mutares is counting on divestitures in defence, energy and energy infrastructure to generate cash. The group’s exit pipeline is described as “record?high”, and success in closing those sales is the linchpin of the bond?reduction plan.

SABIC megadeal and US expansion add strategic heft

Alongside the balance?sheet repair work, Mutares is preparing its next major growth step. The planned acquisition of SABIC’s engineering thermoplastics business – carrying an enterprise value of US$450 million – is set to create a new “Chemicals & Materials” segment in 2026. Existing holdings such as Greer Steel and Holliday Pigments will be folded into that unit, with management betting on scale effects in materials processing. North and South America are expected to become a larger part of the portfolio.

To fund that push, Mutares completed a capital increase in April. The company already has a presence in Chicago and is scouting a second US location, while its American acquisition pipeline covers opportunities with a combined annual revenue volume of roughly €4.8 billion.

Dividends and guidance remain intact – for now

Despite the covenant headwinds, the board is sticking to a dividend proposal of €2.00 per share for fiscal 2025. Shareholders will vote on the payout at the annual general meeting on 3 July 2026, just days after the covenant deadline. Mutares views the sum as a minimum dividend, with an additional performance dividend under consideration should larger exits materialise.

The full?year 2026 outlook is also unchanged: group revenue in a range of €7.9 billion to €9.1 billion and a holding?level net profit of €165 million to €200 million. Medium?term ambitions are even bolder – Mutares aims for annual growth of at least 25% in both revenue and holding net profit through to 2030, and expects to hit the previous 2028 targets of €10 billion in revenue and €200 million in holding profit “well ahead of schedule”.

Mutares at a turning point? This analysis reveals what investors need to know now.

The stock reflects the standoff

Investors have yet to fully buy into the recovery narrative. The shares closed at €26.45 on Friday, up 5.15% over the past 30 days but still 11.20% lower year?to?date. Over a 12?month horizon the decline deepens to 20.45%, signalling persistent scepticism about whether the strategic ambitions can be funded without further strain on the balance sheet.

The next few weeks will be decisive. If Mutares can stabilise the covenant ratio, execute the bond buybacks from exit proceeds and push through divestitures, the spotlight could shift back to the operational turnaround. If progress stalls, the covenant issue is likely to dominate the AGM and cloud the outlook for the rest of the year.

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