Aryzta shares tumble as company plans raise up to €800m in equity


Aryzta CEO Kevin Toland has been in charge since last year
Aryzta CEO Kevin Toland has been in charge since last year

Shares in embattled Swiss-Irish food group Aryzta, which owns the Cuisine de France brand, tumbled more than 11pc in Dublin in early trading as the company said it will raise up to €800m in equity to primarily repay debt.

The cash call will see the
stakes in the firm owned by shareholders who don’t participate in
the fundraising significantly diluted.

“A significantly improved
capital structure will provide Aryzta with the means to continue to
take the necessary steps to re-position the business and deliver on
our strategy,” said chief executive Kevin Toland, who was
parachuted in last September to help turn the ailing group around.

He added: “Over the medium-term, we expect to generate significant
cash flow which will be applied towards continued net debt
reduction and to resource selective growth opportunities.”

The cash
the group plans to raise will be primarily be used for debt
reduction. Mr Toland has faced significant challenges in getting
Aryzta back on track, and now faces headwinds including likely
higher input costs as wheat prices rise following a summer
heatwave.

BofA Merrill Lynch and UBS have been appointed as process
banks and joint global coordinators for the planned equity raise.
Credit Suisse and JP Morgan have been appointed as joint global
coordinators to arrange the capital increase. Aryzta said that
trading in the fourth quarter of its financial year was in line
with expectations.

It expects to generate full-year earnings before
interest, tax, depreciation and amortisation (EBITDA) of between
€296m and €304m. It was also in compliance with its covenants
during its latest full financial year.

“Aryzta remains committed to
the €1bn deleveraging target over four years (prior to the
announced capital raise), including at least €450m of disposal
proceeds and the balance from cash flow generation,” it added.

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