CUISINE de France owner Aryzta, which also makes bread products for companies such as Subway and McDonald's, has received a "precautionary amendment" to its financial covenants to give it increased headroom during the coronavirus pandemic.
The company, led by chief executive Kevin Toland, said that at the end of April, it had liquidity of more than €385m. That compared to €360m on March 24.
It said that an agreement to formally implement the covenant amendment is expected to be executed shortly.
The amendment will apply to two upcoming covenant tests: one relating to Aryzta's annual financial statements as at the end of July, and another relating to its interim financial results at the end of January 2021.
The net debt to Ebitda (earnings before interest, tax, depreciation and amortisation) coverage ratio will be lower or equal to six times under the amendment, while the net interest coverage ratio shall be greater than 1.5 times.
The company said it has no material debt maturities over the coming 16-month period, with €17m due in March 2021.
Aryzta - which before the crisis had been engaged in a sweeping turnaround project - said it has taken "immediate and decisive action" to maximise cash and reduce costs during the pandemic.
It has suspended production in three bakeries in Europe and five in North America. Production lines at other bakeries have been temporarily closed, while 30pc of its staff have been furloughed.
The Swiss-Irish group has also suspended future capital expenditure, excluding that on health and safety.
Its executive management committee has taken a 30pc cut in pay for three months, while Aryzta's wider leadership team has taken a 15pc cut. The board of directors has seen a 30pc reduction in fees.
"Aryzta has activated its full business continuity plans to maintain service levels and to meet our customers' expectations," the company said this morning.
It added that it was "fully committed to playing our part as an essential industry providing food at this difficult time".
Shares in Aryzta, which has its roots in IAWS, were trading 2.3pc lower in Switzerland soon after the announcement yesterday morning.
In March, Aryzta said the pandemic would have a "material impact" on the group during its current financial year.
"We cannot reasonably gauge what consequences will result from the situation as neither the duration nor the depth of this issue can be fully assessed at this point in time," it warned at the time.