(Update: Losses deepen, BASF and Wacker share prices, more commentary)

FRANKFURT (dpa-AFX Broker) – The preliminary failure to sell the remaining stake in the Envalior joint venture once again sparked financing concerns among Lanxess shareholders on Friday. After initially dropping below the 15-euro mark, shares slid even further to their lowest level since 2009, falling below 14 euros. By the afternoon, the decline had widened to more than 17 percent, with shares trading at 13.55 euros.

Joint venture partner Advent is currently unwilling to acquire the Envalior stake, citing the agreed-upon financing condition. Now, the purchase rights for the company, which specializes in engineering plastics, will apply for 2027 and 2028.

Anil Shenoy of Barclays Bank wrote that he did not expect a deal to be concluded this year anyway. However, he noted that investors are now shifting their focus to Lanxess’s debt load. He considers a capital increase possible and sees his negative outlook on Lanxess’s shares and bonds as reinforced.

According to analyst Chetan Udeshi from US bank JPMorgan, balance sheet concerns have long been the dominant theme in the Lanxess equity story. Christian Bell of UBS fears that Lanxess could lose its "investment grade" status with rating agencies. The company’s debt-to-operating earnings ratio stands at 3.7, well above the 2.5 threshold for bonds of top to medium quality.

Generally, a downgrade below this rating is referred to as "junk status." This could drive up financing costs for the heavily indebted company. However, Lanxess itself maintains that it is solidly financed for the long term, even without proceeds from the stake sale. The company said on Thursday evening that repayment of the bond due in October is already secured. Lanxess had originally planned, as announced last September, to raise 1.2 billion euros from the sale this year.

Udeshi concludes from Advent’s decision that it is also related to the challenging environment for cyclical chemical companies. In his view, this is not yet fully reflected in other sector stocks such as BASF or Wacker Chemie. In a market environment still marked by oil price uncertainty, BASF shares also fell by 2.6 percent on Friday, while Wacker stood out in the MDax with a drop of more than five percent./tih/mis/stk