Sappi acts to strengthen balance sheet amid elevated leverage

Sappi Limited provided a voluntary update on actions taken following its 3Q2025 results, addressing an elevated leverage ratio. This was driven by the Somerset PM2 conversion, a weak USD impacting Euro-denominated debt, pricing headwinds, and a challenging macroeconomic environment. The company's immediate focus is on debt reduction and balance sheet strengthening.

To achieve this, Sappi has adjusted capital expenditure downwards for the next two years, with no expansionary capex anticipated. Furthermore, the board decided to suspend the dividend for fiscal 2025 to preserve cash. Proactive measures to maintain financial flexibility include current group liquidity exceeding $800 million, comprising cash and committed Revolving Credit Facilities.

The company's banking group has unanimously supported increasing leverage covenant levels for the next 12 months, providing additional headroom. Discussions are commencing to extend Revolving Credit Facilities, with finalization expected in early 2026. Sappi is also progressing well in terming out a significant portion of its short-term debt with a new 5-year term facility.