Aryzta responds to Cobas attack on funding plan

Frozen baked goods supplier Aryzta has hit back following a challenge by its largest shareholder over plans for the company to raise €800m.

Aryzta announced in August that it had reviewed its capital structure and was approaching shareholders with a view to raising €800m to reduce debt.

Shareholder Cobas Asset Management this month claimed the €800m funding increase was too high, suggesting instead a €400m capital increase and sales of non-core assets to raise a further €250m. It claimed its alternative significantly improved the outlook for shareholders in the medium term in comparison to the €800m plan.

Aryzta today (17 October) said its board unanimously believed the Cobas plan was “inadequate and presents significant execution risk for shareholders”. It claimed a lower capital raise would not address the business’ liquidity and financing needs, including headroom for covering substantial swings in net working capital.

The company said its board had worked with independent financial advisor Rothschilds to examine the Cobas proposal, including a review of the funding and capital structure implication.

“While the group welcomes and respects the views of all shareholders, the board remains firm and unanimous that €800m of equity capital is required to reduce its excessive debt levels, strengthen its balance sheet and provide the necessary liquidity and working capital funding to deliver on its multi-year turnaround plan,” Aryzta added.

Earlier this month, Aryzta reported a drop in profit and earnings – but insisted it was well placed for future growth. Announcing its results for the year to 31 July 2018, the business reported a 9.5% fall in revenue to €3,435m (£3,057m), down 1.2% on an organic basis.

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