Aryzta bites bullet with plan to raise €800m equity
The embattled Swiss-Irish baked goods firm Aryzta has announced an €800m rights issue that management hopes will create a more stable foundation for its recovery.
Existing shareholders who don't participate in the planned equity fundraising will see their stakes in the troubled business slashed.
Investors who held on to shares in the Cuisine de France owner for the past couple of years have already endured value erosion.
The shares have slumped 80pc since December 2016, shortly before it issued one of a string of profit warnings.
Its market capitalisation has plummeted from about €3.5bn to €668m in that time.
The shares had fallen almost 50pc in the 18 months before that. Speaking to analysts yesterday, Aryzta CEO Kevin Toland said the equity fundraising "wasn't our preferred choice".
He said the planned €800m equity raise "is the number we determined was the right mix to let us develop the business, to have a normalised debt structure and lower levels of leverage".
Aryzta, which manufactures burger buns for McDonald's, had net debt of €1.62bn at the end of January, and the equity proceeds will be used primarily to reduce it.