Monday 23 September 2019

Toland scrapes through vote on €800m Aryzta capital hike

Victory: CEO Kevin Toland
Victory: CEO Kevin Toland
Ellie Donnelly

Ellie Donnelly

Shareholders backed Aryzta's €790m capital increase at a vote in Zurich, despite public opposition from its own largest shareholder Cobas Asset Management.

The company's shares fell 16.92pc yesterday.

The vote was passed by 53pc of shareholders at the group's annual general meeting, a narrow margin, with 46.98pc of votes cast against.

Aryzta's chairman Gary McGann said he was "hugely relieved" by the result.

It will mean that the company's existing shareholders will be offered the right to buy 10 new shares for every share they hold.

The chairman himself was also re-elected along with the other directors, although with relatively low levels of shareholder support.

No director won as much as 62pc of voting shares and there was a high level of abstention in many of the motions.

Still, all resolutions at the AGM were carried.

The capital plan will see the group increase its share capital through an issue of 900,184,940 new registered shares with a nominal value of CHF 0.02 (€0.018) each.

The new shares will be offered to existing shareholders at a price of CHF 1.00 (€0.88) per share, a dilution of more than 80pc, according to investment bank Vontobel.

"Our worst-case scenario was based on a capital increase at CHF2 per share," Vontobel analyst Jean-Philippe Bertschy wrote in a note before the vote.

"The dilution is substantial, as is the downside to current share price levels."

Aryzta, whose CEO is Kevin Toland, plans to use €500m of the equity raised to repay an existing term loan, with €150m earmarked for its Project Renew plan designed to generate cost savings and introduce efficiencies.

The proposal had met opposition ahead of the shareholder meeting, most vocally from Cobas Asset Management, Aryzta's largest shareholder with a 14.7pc stake.

It claimed that the baked goods group was painting an "unduly grim picture" of its current situation "with the sole intent to convince shareholders to support the excessively large and dilutive capital increase".

Aryzta, which also makes breads under the Cuisine de France and Otis Spunkmeyer brands, and has major customers including McDonald's, launched the capital increase proposal as it looks to emerge from the aftermath of an acquisition spree which had loaded the business with debt.

Its has seen the exit of long-time CEO Owen Killian, and has struggled with write-downs, a legacy of high financing costs and the dilemma of what to do with a 49pc stake in French frozen foods firm Picard.

Irish Independent

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